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UNCLAS SECTION 01 OF 09 TOKYO 002739 
 
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 06/18/07 
 
 
INDEX: 
 
(1) Total lifting of the ban on US beef imports so quickly? - Part 
1: US becoming more aggressive, backed by OIE endorsement; Japan may 
flinch and respond to talks to ease import conditions 
 
(2) 2007 Upper House election: LDP may face uphill battle even in 
conservative electoral districts -- Ishikawa, Saga 
 
(3) 2007 Upper House election (Part 4): Aftermath of controversial 
postal reform still lingers on 
 
(4) 20 million voters in "lost generation" the greatest variable in 
Upper House election 
 
(5) Policy watch: Economic policy guidelines should not be regarded 
as end of debate 
 
ARTICLES: 
 
(1) Total lifting of the ban on US beef imports so quickly? - Part 
1: US becoming more aggressive, backed by OIE endorsement; Japan may 
flinch and respond to talks to ease import conditions 
 
TOKYO SHIMBUN (Page 20) (Full) 
June 18, 2007 
 
By Takeshi Yamakawa 
 
Seiyu started selling US beef in late March of this year. It is the 
first leading supermarket chain to resume dealing with US beef. This 
reporter visited its Akabane outlet in Kita Ward, Tokyo, where its 
head office is located, several times. 
 
I obtained various responses from shoppers whom I interviewed. A 
housewife (50), who bought domestically produced beef offered at a 
bargain price, said, "I only buy home-grown goods, whether it is 
beef or vegetables." Another customer (46), a part-time worker, 
said, "US beef? My resistance to US beef has disappeared. I am more 
concerned about food additives than BSE. I attach more importance to 
price than to country of origin." She put pork instead of beef in 
her basket after much wavering. Another shopper (56), also a 
part-time worker, picked Australian beef, saying, "I do not mind 
having US pork, but I still hesitate to eat US beef. I will perhaps 
eat it if everybody else eats it." 
 
Sales of US beef appear to greatly differ depending on the area. 
However, as long as I have observed this Seiyu store, domestic beef 
appears to be selling more than US beef, though the allergic 
response to US beef has certainly weakened. I also had the 
impression that pork and chicken were selling better than beef. The 
poor showing of beef sales seems to be due to a slow recovery of 
demand for the product, which fell in the wake of the BSE problem, 
and to high prices. 
 
Responses of supermarket chains and beef-bowl restaurants differ. 
Seiyu on June 1 increased the number of outlets that sell US beef 
from 52 to 158, covering all outlets in the Kanto region and part of 
the Tohoku region, as it sold better than the company had expected. 
 
The Aeon Group remains cautious about selling US beef noting that 
although it has no particular concerns about the safety of US beef, 
it has yet to determine that consumers feel reassured about the 
 
TOKYO 00002739  002 OF 009 
 
 
safety of US beef. Aeon has its own ranch in Tasmania, Australia. 
Its sales of US beef, therefore, had been small -- 15% -- even 
before the import ban was placed on US beef, with Australian 
products at 35% and domestic products at 50%. 
 
Ito-Yokado sold US beef at one outlet in Tokyo and another in Sendai 
in May as test marketing. It appears to have received a good 
response with one official noting, "Even though the prices were 
rather high, all the products sold out. We have received a report 
from our beef buyer who inspected production facilities in the US 
noting that they have improved in their quality checking system." 
However, he said, "We need to have several more test sales before we 
officially decide to sell it." 
 
Among various beef-bowl restaurant, Yoshinoya D&C tends to be most 
affected by the fate of US beef. It started selling beef bowls using 
US beef from 11:00 a.m. through 24:00. Since it has become 
impossible to cover the necessary amount with US beef alone, it is 
now covering the shortage using Australian and Mexican beef, up to 
30%. It intends to patiently wait for the total lifting of the 
import ban with one official noting, "The cost of purchasing US beef 
is now two to three times more than before. We highly hope that 
imports of US beef will normalize. However, we have stopped swinging 
between elation and desperation due to short-term developments." 
 
Zensho, Yoshinoya's rival company, which runs Sukiya and Nakau, 
categorically said that it has no intention of purchasing US beef. 
It harshly criticized the situation in the US with one official 
saying, "The US beef policy has not changed at all whether it is 
feed-grain regulation, the removal of specified risk materials (SRM) 
and BSE inspection. It has refused to carry out full inspections 
probably because it is afraid of spotting BSE-infected cattle." 
 
(2) 2007 Upper House election: LDP may face uphill battle even in 
conservative electoral districts -- Ishikawa, Saga 
 
NIKKEI (Page 2) (Full) 
June 15, 2007 
 
Ichiro Ozawa, president of the major opposition Democratic Party of 
Japan (Minshuto) on June 12 arrived in Ishikawa Prefecture after 
cutting short his business trip to the Kyushu region. Meeting 
reporters at a hotel in Kanazawa City, he told them: "Although our 
party may be behind in starting to campaign here, I will do 
everything I can to have our candidate win this electoral district 
in the upcoming Upper House election." Ozawa chose former House of 
Representatives member Yasuo Ichikawa as a Minshuto-authorized 
candidate for the single-seat constituency. Ichikawa was the last 
candidate to be chosen by the party to run in single-seat 
constituencies across the country. 
 
Ishikawa Prefecture is former Prime Minister Yoshiro Mori's home 
turf and lawmakers elected from that prefecture are all ruling 
Liberal Democratic Party (LDP) members.  A prevailing view there 
accordingly is that the LDP has an advantage in the upcoming Upper 
House election as well -- but things are not that simple. 
 
Kanazawa City "opposed to Mori" 
 
"Shinshin (New Frontier) Ishikawa" is a prefectural assembly group 
formed to back the late Keiwa Okuda, who left the LDP after a fierce 
battle with Mori under the multiple-seat constituency system.  The 
reason why Minshuto delayed choosing its candidate is because it was 
 
TOKYO 00002739  003 OF 009 
 
 
looking for ways to team up with Shinshin Ishikawa, which has a 
solid political base in Kanazawa City. A former local public servant 
explained: "Voters in Kanagawa are not anti-LDP but anti-Mori." 
 
Minshuto initially sought to back former Okuda's son, Ken, a former 
House of Representatives member, but this idea was aborted. Next, 
Shinshin Ishikawa moved to field Tetsuo Kutsukake, an incumbent 
House of Councilors member of the LDP who is at odds with Mori over 
when to retire. But meeting with a fierce objection from the LDP, 
Kutsukake was forced to declare he would give up running for the 
Upper House election. Shinshin Ishikawa Chairman Hiroshi Kanehara 
met with Ozawa and entrusted the selection of a candidate for the 
Upper House election entirely to Ozawa, telling him: "I'll work 
together to win the Upper House election." Kanehara promised Ozawa 
he would cooperate with him to unseat the LDP. 
 
Meanwhile, former Prefectural Assembly member Tomiro Yata, whom the 
LDP has put on its ticket in this past January, is stepping up the 
efforts to ensure organized support by touring 70 companies and 
organizations in a day. Most municipality heads in the prefecture 
favor the LDP. On June 9, Yata attended a gathering of dieticians in 
Kanazawa City and declared, "I will do my best for the people of the 
prefecture." 
 
Yata comes from Tsubata Town, adjacent to the northern part of 
Kanazawa City. On June 2, he set up an election headquarters of the 
(LDP) Kanazawa chapter and is busying himself putting into practice 
his strategy to win a victory in Kanazawa. Kutsukake has distanced 
himself from Yata, proclaiming he will focus his energies on backing 
his relative, who is to run as an LDP candidate for the proportional 
representation seat. 
 
Candidates replaced 
 
In the conservative constituency in the Kyushu region as well, the 
LDP is put in a shaky situation. In Saga Prefecture, the LDP 
replaced its authorized candidate, making the only case of 
replacement among the constituencies across the country. 
 
Specifically, incumbent member of the House of Councilors Takao 
faced the trouble involving the bankrupt Saga Fire Mutual Aid 
Association on Commerce and Industry, in addition to criticism of 
his being old age as a candidate. Jinnai eventually refused to run 
as an LDP authorized candidate, and following that, on May 25, the 
LDP decided to field former Vice Gov. Yoshiyuki Kawakami. On June 
11, Kawakami sought support at a gathering of supporters by telling 
them: "I have no time to lose before the election. I pin my hopes on 
your support." His staff is making desperate efforts to make his 
name known widely to construction companies and commerce and 
industrial organizations. 
 
Minoru Kawasaki, who is on the Minshuto ticket for the Upper House 
election, garnered some 20,000 votes in the previous election. "I 
have given public speeches here for three years, and I now need your 
support to work at the center of the political world," Kawasaki 
shouted at a crossroad of highways at the outskirts of Saga City. 
There were few pedestrians, but at times the driver of a vehicle 
waiting for a change of the signals shouted back: "Do you best!" 
 
Until recently, Kawasaki's campaigning staff planned to garner as 
many votes critical of Jinnai as possible in urban areas, including 
Saga and Tosu, describing Jinnai as a potential enemy. But with the 
replacement of Jinnai, one member of Kawasaki's staff said, "Because 
 
TOKYO 00002739  004 OF 009 
 
 
of the replacement, we've found it rather difficult to fight." The 
staff already has mounted 4,000 posters throughout the prefecture in 
an effort to make Kawasaki's name widely known even in the 
mountainous areas. One aide to Kawasaki noted: "The question is how 
to destroy the LDP's bastion." 
 
It was Prime Minister Shinzo Abe, president of the LDP, who insisted 
on the replacement of candidate. Abe is to arrive in Saga on June 
16, but local residents are somewhat cool, with one person saying: 
"Jinnai was rejected unilaterally. If the LDP lost the seat, the 
party headquarters should be to be blamed." 
 
(3) 2007 Upper House election (Part 4): Aftermath of controversial 
postal reform still lingers on 
 
NIKKEI (Page 2) (Abridged) 
June 16, 2007 
 
Takao Fujii, an independent candidate, addressing a gathering in 
Gifu City on June 15, emphatically said: "There is a world of 
difference between wearing a Diet member's pin and not wearing one. 
Thank god, I will have another chance." 
 
In the 2005 House of Representatives election, the controversial 
postal-privatization plan (of former Prime Minister Koizumi) 
directly hit Gifu. In District 1, anti-postal-privatization lawmaker 
Seiko Noda, running as an independent, faced off against LDP 
candidate Yukari Sato, while in District 4, the anti-postal 
privatization group's Fujii ran against the LDP candidate Kazuyoshi 
Kaneko. Fujii lost that race, but he now has decided to run in the 
upcoming Upper House race. 
 
Noda camp vs. Sato group 
 
Tsuyako Ono, the LDP incumbent, has announced that she would not run 
 
SIPDIS 
in the upcoming Upper House race in Gifu. Liberal Democratic Party 
Secretary General Hidenao Nakagawa has told Fujii that if he is 
 
SIPDIS 
elected, the LDP would let him to rejoin the party. 
 
At the same time, the LDP Gifu chapter is still deeply divided 
between Noda and Sato supporters. This has forced Fujii to produce 
two types of posters: one showing him posing him with Noda, who has 
rejoined the LDP, and the other showing him with Sato. 
 
The major opposition Minshuto (Democratic Party of Japan) is no 
better than the LDP when it comes to party unity. Some 30 party 
members in the Gifu chapter who were urging generational change left 
the party this January in protest against the party leaders' 
decision to endorse Kenji Hirata for a third term. 
 
Although a senior prefectural chapter official said, "It will not 
impact negatively on the race," the Hirata camp has set up a 
pension-complaint box in front of the campaign office. The camp is 
apparently trying to win the hearts of unaffiliated voters. 
 
The fallout of the postal privatization is being felt even more 
acutely in single-seat electoral districts in Oita. 
 
The LDP's freshman candidate Yosuke Isozaki, attending a gathering 
attended by Lower House lawmaker Masazumi Gotoda, made this pitch: 
"Although many candidates are running in this constituency, no one 
knows more about what's really happening in this prefecture than I 
do." 
 
TOKYO 00002739  005 OF 009 
 
 
 
The baseline number of votes projected by the Isozaki camp is 
300,000, close to the win-lose borderline. Isozaki's chances of 
winning a seat will increase once 70,000 to 80,000 New Komeito votes 
are added. At the same time, however, the expected candidacy for a 
proportional representation seat by Seiichi Eto, a postal rebel who 
has been allowed to rejoin the LDP, is casting a shadow on Isozaki's 
bid. 
 
Opposition camp also disunited 
 
Coalition partners LDP and New Komeito originally envisaged campaign 
cooperation to support the former candidate in the electoral 
district and the latter candidate in the proportional representation 
segment. However, now that Eto is a candidate, the votes of LDP 
supporters might flow to him rather than to the New Komeito's 
candidate. 
 
The situation is not necessarily advantageous to opposition parties, 
either. "I won't be able to win a seat without LDP and Social 
Democratic Party (SDP) votes," said Taiwa Yano, an independent 
candidate and a former Saiki City assemblyman backed by the Minshuto 
prefectural chapter. He was addressing a crowd of some 1,200 people 
on June 13. 
 
Minshuto searched for ways to join forces with the Social Democratic 
Party (SDP), but that party decided to back physician Bunroku 
Matsumoto at an early stage. The SDP has thus "split" with the 
Minshuto Oita chapter, which was insistent on supporting Yano. With 
the Rengo (Japanese Trade Union Confederation) Oita chapter having 
decided to let its 60,000 members cast their votes independently, 
supporters for Minshuto and the SDP are also likely to split 
evenly. 
 
The People's New Party lawmaker Hiroko Goto, a former postal rebel, 
has abruptly joined the Oita race, reversing her earlier decision to 
seek a proportional representation seat. "She will garner 
conservative votes that have nowhere to go by taking advantage of 
the splits between the LDP, New Komeito, and the SDP," a senior Goto 
camp official declared. Fierce competition is expected. 
 
(4) 20 million voters in "lost generation" the greatest variable in 
Upper House election 
 
ASAHI (Page 3) (Abridged) 
June 13, 2007 
 
Young people aged 25-35 have had a hard time of it as their 
postgraduate job-hunting season fell during the nation's prolonged 
economic slump. They are called the "lost generation." This April's 
local elections came out with a sharp increase in the numbers of 
candidates and winners from the lost generation, and a tide of new 
political participation from that generation came in sight. The next 
focus, however, is on how the lost generation will come out as 
voters in this July's election for the House of Councillors. The 
ruling Liberal Democratic Party is rattled by a sharp drop in the 
Abe cabinet's support rate, and the leading opposition Democratic 
Party of Japan (Minshuto) is now on the offensive. Both the LDP and 
the DPJ regard this lost generation as the final key to the upcoming 
Upper House election. Meanwhile, online networks like Yahoo! Japan 
and other organizations have set out to boost the turnout of voters 
in trying to show the political power of young people. There are 20 
million voters in this lost generation. How they vote may become one 
 
TOKYO 00002739  006 OF 009 
 
 
of the greatest variables in the election. 
 
With the government's fiasco over its loss of pension records, the 
opposition camp now sees a way to drive Prime Minister Abe and his 
government into a corner. In 2005, Prime Minister Koizumi dissolved 
the House of Representatives for a general election over his 
initiative to privatize the nation's state-run postal services. At 
the time, the LDP won votes from young people and floating voters 
with no particular party affiliation to win the general election. 
This time, however, the key is which side will win their votes. 
"We've not necessarily seen an avalanche of the floating voters to 
either side yet," DPJ Secretary General Yukio Hatoyama said on June 
¶3. He added, "Our challenge is how to win their votes." 
 
Kan Suzuki, 43, a DPJ member currently seated in the House of 
Councillors, has a similar feeling as he is aiming for reelection in 
Tokyo. On June 10, there was a group of DPJ junior lawmakers 
gathered in front of the east exit of Shinjuku Station in Tokyo. 
They walked down the street with "Minshu-kun," the DPJ's new 
character created from the party's logo. In addition, the DPJ's 
youth bureau also prepared 700 banners with a friendly mark printed. 
The DPJ distributed those banners to its prospective candidates 
throughout the country for this summer's House of Councillors 
election. On the side of policies as well, Suzuki is attaching 
importance to pensions and also to labor issues, such as correcting 
wage gaps between full-time and part-time workers. 
 
Another weapon for Suzuki is the Internet. On June 2, Suzuki became 
the first incumbent lawmaker to hold a town meeting on "Second 
Life," a virtual space on the Internet. "Let us increase 
scholarships to reduce the burden of educational spending," Suzuki 
said. There were only 134 participants in the online event. However, 
Suzuki felt something greater than the number from responses to his 
proposal of a new political campaign. 
 
In the meantime, the LDP has also kicked off its campaign. On June 
3, Prime Minister Abe went to the Hachiko statue in front of Shibuya 
Station in Tokyo. "Before talking about the abduction issue," Abe 
said there, "I'd like to talk about the pension issue, which is a 
matter of very high concern to the public." 
 
This was one of the LDP's street campaigns developed across the 
nation at its youth bureau's initiative. At first, Abe had 
considered focusing on the abduction issue. However, his cabinet's 
support rate plummeted right before he was out on the street 
campaign. Eventually, Abe's speech was about the pension issue 
almost in its entirety. 
 
In the fall of last year, Hiroshige Seko, one of Abe's special 
advisors, launched a public relations strategy team in the LDP. The 
team intended to make policy proposals based on its analysis of 
public opinion, anticipating that young people in their 20s and 30s 
would hold the key for the LDP to win in this summer's House of 
Councillors election following the 2005 general election. However, 
the Abe cabinet's support rate went down. The team meets every 
Tuesday on the fourth floor of LDP headquarters. However, the team 
is worried about what is now before its eyes. Satsuki Katayama, 48, 
chief of the LDP's public relations bureau, is one of the team's 
members. "The situation is now so chaotic that we cannot look ahead 
into the future," Katayama says. She added, "I know we have to do 
something in campaigning for young people's votes, but we don't know 
what we can do." 
 
 
TOKYO 00002739  007 OF 009 
 
 
However, the LDP youth bureau's anxiety is growing strong. 
"Generations affected in the aftermath of the bubble economy's 
collapse are dissatisfied in some way with things around them," says 
Koichi Hagiuda, 43, an LDP member seated in the House of 
Representatives. He added, "Good or bad, their dissatisfaction will 
get into politics." 
 
(5) Policy watch: Economic policy guidelines should not be regarded 
as end of debate 
 
SANKEI (Page 1) (slightly abridged) 
June 18, 2007 
 
By Heizo Takenaka 
 
At this time every year, attention is focused on the government's 
annual "big-boned guidelines on economic and fiscal policy." This 
year, though, people are somewhat less interested in them, their 
attention turned toward the pension issue that was caused by sloppy 
record keeping by the Social Insurance Agency. This does not mean 
that the importance of the guidelines is fading. 
 
When the government launched work to lay out its first economic 
policy guidelines in 2001, bureaucrats and politicians remained cool 
to them. However, various advisory councils of government agencies 
and divisions in the Liberal Democratic Party now issue reports with 
recommendations and conduct debates in line with the government's 
annual economic policy guidelines. This reflects that the annual 
report has taken root as the cabinet office's systemic policy 
guidelines 
 
However, there could be a harmful side-effect from the establishment 
of the policy framework, that is to say, we might begin to think it 
is not necessary to carry out other measures than those included in 
the policy guidelines. We must be careful so as not to fall into a 
state of stopping thinking on our own. Since the government has 
employed ingenuity, the annual guidelines have taken root to this 
extent. 
 
Some suggest that annual economic policy guidelines should be made 
the end all of policy debate. To overcome such a backward-looking 
view, I make the following three suggestions. 
 
The first is that debate on macro-economic management should be 
hurriedly carried out. The draft guidelines for fiscal 2007 
apparently show a lack of discussion on how to manage the 
macro-economy. It should be the priority duty for the Council on 
Economic and Fiscal Policy (CEFP) to conduct checks on macroeconomic 
management. 
 
The GDP statistics released recently set the nation's real economic 
growth rate in fiscal 2006 at 2.1% and the nominal growth rate at 
1.4%. 
 
The government and the ruling coalition have publicly pledged to 
grow the economy by 2% in nominal terms in fiscal 2006 by overcoming 
deflation. They have put forth this pledge since fiscal 2003. In its 
initial economic outlook for fiscal 2006, the government also set 
the real economic growth rate at 1.9% and the nominal rate at 2.0%. 
The real growth rate in the GDP statistics is higher than that in 
the outlook, but Japan failed to conquer deflation. I expressed my 
view in a CEFP meeting two years ago that it would be impossible to 
overcome deflation if no additional measures are taken. But the 
 
TOKYO 00002739  008 OF 009 
 
 
cabinet office remained unresponsive, without changing its outlook. 
One of the private-sector panel members offered this optimistic 
view: "The Japanese economy may finally emerge from the ongoing 
deflationary spiral." Bank of Japan (BOJ) Governor Fukui replied: 
"Japan, in the direction of emerging from deflation, is now at a 
crucial juncture, so we must take proper measures." But Japan has 
yet to emerge from deflation. 
 
In recent years, the government has come up with several important 
numerical targets as its public pledges, attaching deadlines, such 
as halving the banks' non-performing loans, eliminating the 
government's deficit in the primary balance, and doubling the number 
of tourists from overseas. All these have already been implemented 
or are about to be attained. But Japan has failed to meet only one 
goal: ending deflation. 
 
The Cabinet Office and the BOJ must clearly explain why the pledge 
has not been attained on their own responsibility, as well as what 
measures they plan to take to recover from this failure. The CEFP 
has yet to discuss this point, although the statistics has already 
been released. If the panel thinks it impossible to work out 
measures before it completes the final version of annual economic 
policy guidelines, the panel should immediately start discussion on 
macroeconomic management outside the framework of policy 
guidelines. 
 
The second key point is that the economic policy panel should 
declare continuing policy debate. Among key policy measures in the 
fiscal 2007 guidelines, there are some for which satisfactory 
achievement has yet to be produced due to strong opposition, for 
instance, an "open-sky policy" I cited in this column when the 
previous version of policy guidelines was announced. Despite 
strenuous efforts by the Prime Minister's Office (Kantei), only 
limited achievements have so far been produced. Reflecting time 
constraints, it will be impossible to include every proposal in the 
2007 guidelines, but such non-attainment measures should not be 
treated as already settled in the guidelines. 
 
Private-sector panel members should propose continuing such 
non-attainment reform measures. Such a stance will contribute to 
improving the CEFP and annual economic policy guidelines. 
 
Third is that the government should demonstrate its eagerness to 
promote reforms in appointing personnel, in particular, for top 
posts in government-affiliated institutes. It usually takes long 
time to carry through one policy and produce results. 
 
However, there is a means for the government to show the public its 
eagerness for reform quickly and clearly. That is to place the right 
people in the right jobs. Recently, the Kantei under the lead of 
Chief Cabinet Secretary Yasuhisa Shiozaki displayed leadership in 
appointing a private citizen as president of International Airport 
Corporation, with an eye to its future privatization. The 
appointment was made over the protest of the Ministry of Land, 
Infrastructure and Transport, which aimed to reappoint the incumbent 
who used to be its vice minister. 
 
What is to be noted from such a point of view is who will be picked 
as presidents of the Development Bank of Japan and Shoko Chukin 
Bank. The two companies are discussing details about what to do with 
their business models after privatized. But it is a parody for the 
appointment process to be carried out under their presidents, 
because the president of the Development Bank of Japan used to be 
 
TOKYO 00002739  009 OF 009 
 
 
former foreign vice minister, and the president of Shoko Chukin Bank 
a senior METI official. 
 
Annual economic policy guidelines are extremely important. They 
should not be treated as the termination of policy debate. 
 
SCHIEFFER