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UNCLAS SECTION 01 OF 12 TOKYO 003077 
 
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 07/06/07 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule 
 
4) Yokosuka sailor nabbed by police for two stabbings 
 
Nuclear fallout: 
5) Chief cabinet secretary will not protest US special envoy 
Joseph's comment justifying US atomic bombing of Japan to expedite 
end of war 
6) Debate over atomic bombings: Possible to balance nuclear 
deterrence and abolition stances 
 
Election season: 
7) Hit by Kyuma flap, Abe Cabinet support rate sags to 32 %  in 
Yomiuri poll 
8) Diet closes and election season starts, with 369 candidates ready 
to fight for Upper House seats 
9) Diet ends with backlog of bills that bear Prime Minister Abe's 
policy imprint 
10) Tug of war begins between ruling and opposition camps as to 
which side will win the majority of Upper-House seats in July 29 
election 
11) Prime Minister Abe in press conference focuses on cleaning up 
pension mess, with social security cards possibly by fiscal 2011 
12) Abe does not rule out a consumption tax, promises debate in fall 
 
13) Minshuto head Ichiro Ozawa meets press: If my party loses the 
election, I quit as president 
 
Trade affairs: 
14) USTR Schwab, METI Minister Amari agree to keep working to 
restart WTO round 
15) June statistics show 1.5 fold increase in imports of US beef in 
a month 
16) M&As by foreign firms in Japan during Jan-June show 1.5 fold 
increase 
17) ANA plans to make Okinawa the hub for its Asia cargo operations 
beginning in 2009 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
With the end of the Diet session, election campaign kicks off: Abe 
eager to stay on 
 
Mainichi: 
MEXT revises ordinance to offer condolence payments to students who 
commit suicide outside school 
 
Yomiuri: 
Upper House race begins with end of Diet session: Abe emphasizes 
achievements and predicts victory, while Ozawa plans to pursue 
ruling bloc 
 
Nikkei: 
Ahead of campaign, Abe unveils a plan to issue social security cards 
by fiscal 2011, but avoids mentioning his responsibility for the 
 
TOKYO 00003077  002 OF 012 
 
 
outcome of the election 
 
Sankei: 
Survey of retired administrative vice ministers on amakudari found 
that 25% landed cushy jobs from 1990 to 2006 
 
Tokyo Shimbun: 
More than 40% of retired ranking bureaucrats reemployed thanks to 
good offices of their ministries, but this practice will be illegal 
once law is revised 
 
Akahata: 
Diet session ends and campaign for the Upper House starts; JCP to 
demonstrate its role as "reliable opposition party" 
 
2) EDITORIALS 
 
Asahi: 
(1) Diet session ends without resolving politics-and-money issue 
(2) Sochi chosen as venue for 2014 Winter Olympics: Russia's values 
questioned 
 
Mainichi: 
(1) Campaign: "Abe politics" will be questioned 
(2) Debate over atomic bombs: That their use was a mistake should be 
starting point of nuclear nonproliferation 
 
Yomiuri: 
(1) Pension payment records: Steady implementation of "road map" 
essential 
(2) Responsible policy debate important in election campaign 
 
Nikkei: 
(1) 2007 Upper House election: Ruling and opposition parties should 
compete over measures to resolve pension issue 
 
Sankei: 
(1) We expect parties to engage in constructive policy debate 
(2) One year since DPRK missile launches: Pyongyang cannot be 
allowed to flout UNSC resolution 
 
Tokyo Shimbun: 
(1) Press briefings: Abe remained evasive throughout 
(2) Terrorist attacks in UK: What led doctors to extremism? 
 
Akahata: 
(1) End of Diet session: Time for reliable opposition party 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, July 5 
 
NIKKEI (Page 2) (Full) 
July 6, 2007 
 
10:15 
Met at the Kantei with Japanese chair Akio Mimura and others of the 
group on Japan-Brazil strategic economic partnership. 
 
10:37 
Met Yasuo Wakisaka and other members on the American Football World 
Cup Japan team, followed by advisor Nemoto. 
 
TOKYO 00003077  003 OF 012 
 
 
 
11:12 
Called on Upper House President Ogi, Vice President Imaizumi, and 
other Upper House factions in the Diet building accompanied by LDP 
Upper House Caucus Secretary General Toranosuke Katayama, Chief 
Cabinet Secretary Shiozaki and others. 
 
11:33 
Returned to the Kantei. 
 
12:50 
Attended a Lower House lawmakers' meeting in the Diet building. 
 
13:03 
Attended a Lower House plenary session. Afterward called on Lower 
House Speaker Kono and Vice Speaker Yokomichi accompanied by LDP 
Diet affairs chief Nikai, Shiozaki and others. 
 
13:34 
Attended an election campaign headquarters meeting at party 
headquarters. Afterward attended an Upper House election campaign 
kick-off ceremony. 
 
13:55 
Met LDP Secretary General Nakagawa. 
 
14:05 
Met Japan YPO chairman and others in the presence of Lower House 
member Yasutoshi Nishimura and others. Afterward met Lowson 
President Takeshi Niinami and others in the presence of Nishimura. 
 
15:04 
Met former Finance Minister Shiokawa in the presence of Nakagawa and 
LDP Organization Headquarters chief Kazuaki Miyaji. Nakagawa and 
Miyaji stayed on. 
 
16:06 
Met at the Kantei with Okinawa, Northern Territories Minister 
Takaichi, followed by Lower House members Taimei Yamaguchi and 
Akihiro Nishimura. Afterward met New Komeito head Ota. 
 
17:06 
Attended a government and ruling coalition liaison meeting on the 
pension issue. 
 
18:00 
Held a press conference. 
 
18:46 
Returned to his official residence. 
 
19:23 
Had a telephone conversation with British Prime Minister Brown in 
the presence of advisor Seko and Foreign Ministry European Affairs 
Bureau chief Harada. 
 
19:53 
Returned to his official residence. 
 
22:54 
Appeared on an NTV program. 
 
 
TOKYO 00003077  004 OF 012 
 
 
23:40 
Returned to his official residence. 
 
4) US sailor stabs 2 women 
 
SANKEI (Page 31) (Full) 
July 6, 2007 
 
A girl was found bleeding from the abdomen yesterday morning on a 
street at Umahoricho, Yokosuka, Kanagawa Prefecture. A person 
working at a nearby construction site found her asking for help, and 
he called the police at around 8:30 a.m. A Uraga Police Station 
officer rushed to the scene and found another woman bleeding in a 
room of an apartment across the road. The girl was 16 years old and 
from Tokyo's Suginami Ward. She sustained minor injuries. The other 
one in the apartment was a 26-year-old woman from Ayase, Kanagawa 
Prefecture. She was stabbed in the back and has serious but not 
life-threatening injuries, according to the police. 
 
Kanagawa prefectural police found a 19-year-old US Navy sailor, who 
had fled the scene, at a department store near Yokosuka Chuo Station 
on the Keihin Kyuko railway line at around 10:30 a.m., and the 
police arrested him there on suspicion of attempted murder. The 
arrested sailor is a seaman recruit (nitou-suihei) assigned to a 
frigate stationed at the US Navy's Yokosuka base. He has admitted to 
the charges. "I looked for a relationship with the girl but she 
refused, so I got mad and stabbed her," he was quoted as telling the 
police. 
 
According to police investigations, the girl and the woman got to 
know the US serviceman about a week ago near the Yokosuka base. They 
stayed overnight with the US sailor at the apartment. They quarreled 
in the morning, and the sailor ran away after stabbing the girl and 
the woman in the apartment. The girl jumped out the window of the 
apartment and asked for help, the police said. 
 
US Naval Forces Japan Commander James Kelly said: "We will cooperate 
with the Japanese police authorities. We pray for the victims' 
speedy recovery." 
 
5) Japan will not protest "justification of atomic bombings": 
Shiozaki 
 
ASAHI (Page 4) (Full) 
July 6, 2007 
 
Chief Cabinet Secretary Shiozaki, meeting the press yesterday, 
indicated that the Japanese government would not lodge a protest 
with the US government over US Special Envoy for Nuclear 
Nonproliferation Robert Joseph's recent remarks justifying the 
atomic bombings of Hiroshima and Nagasaki. "I heard he made the 
remark in his personal capacity," Shiozaki said, adding: "I think 
it's important to step up our efforts to eliminate nuclear weapons 
so that these weapons that have brought about tremendous suffering 
to humanity will never be used in the future." 
 
6) Debate over atomic bombings: Nuclear deterrent, abolition can go 
together 
 
SANKEI (Page 1) (Excerpts) 
July 6, 2007 
 
 
TOKYO 00003077  005 OF 012 
 
 
Akio Takahata 
 
"Most historians would agree that the use of the atomic bombs 
brought to a close a war that would have cost millions more lives," 
said US Special Envoy for Nuclear Nonproliferation Robert Joseph on 
July 3. 
 
"There's no change in my stance that I cannot condone the use of 
atomic bombs," said Prime Minister Shinzo Abe on July 4. 
 
Former Defense Minister Fumio Kyuma's controversial remarks have now 
again brought to the fore the perception gap between Japan and the 
United States over the question of the atomic bombings. One month 
from now, the peace memorial ceremonies to console the souls of 
those who were lost due to the atomic bombs will take place. What 
should Japan to do to deal with this deep division? 
 
The use of nuclear weapons is no doubt an inhumane act, and the 
indiscriminate slaughter of civilians must be condemned. It is only 
natural for Japan to call on the nuclear powers in the world, 
including the United States, to scrap their nuclear weapons. 
 
This appeal by Japan has often come under the criticism that while 
seeking nuclear abolition, Japan for its security has relied on the 
US "nuclear umbrella." Japan has been torn over whether to pursue 
"nuclear deterrence" or "nuclear abolition." But that is not limited 
to Japan. 
 
Special Envoy Joseph used the logic that because the atomic bombings 
of Hiroshima and Nagasaki hastened the end of the war, their use was 
appropriate. But historians have been divided over this logic. In 
fact, in reaction to Joseph's remarks, a Russian vice foreign 
minister who joined the same press briefing asked permission to 
speak and warned: "A variety of views have been voiced by historians 
over the pros and cons of the use of nuclear weapons in the late 
days of the war." 
 
Even in the US, at the time of the Korean War, President Truman 
rejected General MacArthur's call for the use of atomic weapons, and 
President Kennedy, faced with the Cuban Missile Crisis, was torn 
over 13 days about whether to use nuclear arms. "The Day After," a 
US television movie aired on ABC in the 1980s, when President Reagan 
was in office, depicted the aftermath of a nuclear war. 
 
This film revealed a nuclear disaster to the American people, but it 
was criticized for distorting the reality of the nuclear deterrence 
during the Cold War. Political consideration was required at the 
time, because America's unilateral disarmament would have had a 
negative impact on its arms control talks with the USSR. 
 
Given that we are torn between an ideal world and reality, the 
important thing is not to be trapped by simple dualism like forcing 
to choose between nuclear deterrence and nuclear abolition. Since 
the end of World War II, Japan has followed its pacifist 
Constitution, while it has built peace and prosperity under the 
Japan-US security arrangements. While aiming for the ideal of 
nuclear abolition, Japan has relied on the nuclear umbrella. Given 
this, the challenge for Japan is to strike a balance between the 
two. 
 
By signing the San Francisco Peace Treaty, Japan abandoned its right 
to claim compensation against the Allies. This means Japan cannot 
 
TOKYO 00003077  006 OF 012 
 
 
claim compensation for the loss of lives due to the atomic bombings. 
But this is one thing, and appealing to the US government and its 
people about the inhumanity of the atomic bombings is another. Japan 
at times gives a candid advice to the US, and Japan does so because 
it is America's ally. 
 
It is also necessary for Japan to freshly address such issues as 
nuclear nonproliferation without being obsessed with past events, 
given the current situation surrounding it. The six-party talks 
urging North Korea to abandon its nuclear ambitions are an important 
step toward denuclearizing the Korean Peninsula. At the same time, 
Japan should ask the US to correct its perception about the atomic 
bombings and request that the nuclear powers should implement the 
nuclear disarmament obligation set forth in the Treaty on the 
Non-Proliferation of Nuclear Weapons. Pursing both is not 
contradictory and is not wrong, either. 
 
In order to achieve these two goals, political wisdom and ideas are 
essential. Newly installed Defense Minister Yuriko Koike noted, 
"Japan should play a role in leading the efforts not to allow the 
use of atomic bombs again." In this regard, we hope to see Prime 
Minister Abe and his staff make even more efforts. 
 
7) Poll: Cabinet support down to 32% 
 
YOMIURI (Page 1) (Abridged) 
July 6, 2007 
 
The approval rating for Prime Minister Abe and his cabinet was 32.0 
%  in the Yomiuri Shimbun's third telephone-based serial public 
opinion survey conducted July 3-5 on the upcoming election for the 
House of Councillors, down 2.4 %age points from the second survey 
taken June 26-28. The disapproval rating was 53.9%, up 2.1 points. 
 
The support rate was up slightly from the first survey (32.9%) to 
the second survey (34.4%). It seemed to keep up in the face of 
public backlashes over the issue of the government's pension 
record-keeping flaws. However, it dropped again, though slightly. 
This can be taken as reflecting former Defense Minister Fumio 
Kyuma's resignation over his A-bomb remarks and the prime minister's 
way of responding to this issue. 
 
8) Diet closes: Prime stopped short of clarifying his responsibility 
for Upper House election results; 369 candidates expected to 
contend 
 
MAINICHI (Page 1) (Full) 
July 6, 2007 
 
Now that the ordinary Diet session went into recess yesterday, the 
ruling and opposition parties have virtually kicked off their 
campaigns for the July 29 Upper House election to be officially 
announced on the 12th. The major campaign issue is the pension 
problem. The focus will be on whether the ruling camp can maintain a 
majority combining seats that are not up for the election this time. 
Prime Minister Shinzo Abe, president of the Liberal Democratic Party 
(LDP), during a press conference on the 5th stressed that it is only 
natural that the Upper House election will ask the leadership and 
reliability of party heads." However, he steered clear of making any 
in-depth comment on his responsibility for the outcome of the 
election, noting, "I have no intention of making any comments on the 
premise of our party being defeated in the election. I would like to 
 
TOKYO 00003077  007 OF 012 
 
 
wait for the result without any preconceived notion. In contrast, 
Democratic Party of Japan (DPJ or Minshuto) head Ichiro Ozawa 
expressed his determination to step down, unless the ruling parties 
lose a majority. A battle over a victory-or-defeat line is thus also 
heating up. 
 
Following the recess of the Diet session, the prime minister 
yesterday evening admitted that the situation for the Upper House 
election is very harsh. However, he indicated a stance of 
challenging the opposition parties, saying, "The election will ask 
voters which side had stronger points in their arguments -- Shinzo 
Abe or Ichiro Ozawa, and whether our commitments were really based 
on facts." Abe stressed his achievements noting, "I have steadily 
built a base for the creation of a beautiful country." He cited the 
passage of three education-related bills and the national referendum 
bill as evidence. He also indicated a stance of fighting the 
election with a policy-oriented approach. 
 
Asked about a victory-or-defeat line in the Upper House election, 
Ozawa during an interview with various news organizations said, "It 
is to gain a majority combining votes garnered by all opposition 
parties." He indicated his resolve to quit if he fails to force the 
LDP and New Komeito into the minority, noting, "If we fail to 
achieve the target, it would be meaningless for me to stay on." He 
apparently tried to shake the prime minister by clarifying the way 
he will take responsibility in the event of the opposition camp 
losing the election. 
 
According to a Mainichi poll, 369 candidates -- 214 for single-seat 
constituencies and 155 proportional representation blocs -- are 
expected to run as of July 5. The number has already topped 320 in 
the previous election in 2004, which saw the smallest number of 
candidates since 1983, when the proportional representation was 
introduced. The current competition rates are 2.93 for the 
single-seat constituency and 3.23 for proportional representation 
constituencies. 
 
9) Diet session ends; Several bills having strong Abe's policy 
imprint carried over to next Diet session 
 
TOKYO SHIMBUN (Page 2) (Full) 
July 6, 2007 
 
The 162-day regular session of the Diet closed yesterday. During the 
session, opposition parties severely grilled the government and 
ruling coalition over former Agriculture Minister Toshikatsu 
Matsuoka's regenerated water issue and the pension record 
mismanagement fiasco. The government and ruling camp often was on 
the defense. As a result, there remains a backlog of bills having 
Prime Minister Shinzo Abe's policy imprint. 
 
With an eye on the House of Councillors election this month, the 
government and ruling camp tried to play up their achievements such 
as the passage of a national referendum bill setting constitutional 
amendment procedures and bills related to education reform. 
 
In addition to the above bills, a bill to reform the Social 
Insurance Agency, a bill amending the National Civil Service Law and 
other measures were enacted during the regular session. Ruling 
Liberal Democratic Party (LDP) Diet Affairs Committee Chairman 
Toshihiro Nikai stated: "We have achieved many results." 
 
 
TOKYO 00003077  008 OF 012 
 
 
The opposition camp, however, assumed the stance of facing down with 
the ruling bloc, pursuing Health, Labor and Welfare Minister Hakuo 
Yanagisawa's reference to women as "child-bearing machines," and the 
pension record mismanagement by the Social Insurance Agency. 
 
As a result of being preoccupied with the pension record fiasco, the 
government and ruling coalition had to carry over to the next 
session three bills related to labor affairs, which are expected to 
be deliberated at Diet committees, and a bill to unify pension 
programs. A bill to set up a Japanese version of the US National 
Security Council was also carried over due to much time spent for 
deliberations on a bill to revise the Iraq Special Measures Law. As 
it stands, several bills, on which the Abe government placed 
priority, were carried over to the next Diet session. 
 
10) Diet session ends, focus shifted to Upper House election; Abe 
eager to remain in office; Victory-or-defeat-line may put ruling 
bloc at advantage 
 
ASAHI (Top play) (Excerpts) 
July 6, 2007 
 
The 166th ordinary Diet session closed yesterday, prompting the 
ruling and opposition parties to engage in full-fledged campaigning 
to win a majority of seats through the July 29 House of Councillors 
election. Major opposition Democratic Party of Japan (Minshuto or 
DPJ) President Ichiro Ozawa indicated that if his party failed to 
achieve a majority in the upcoming election, it would be meaningless 
for him to remain as DPJ head, apparently in a bid to demonstrate 
difference with Prime Minister Shinzo Abe, who has kept avoiding 
mentioning his responsibility. Abe, on the hand, appearing on a 
television program expressed his eagerness to stay on. As for the 
opposition camp, Hiroyuki Arai and Shinpei Matsushita announced that 
they would leave the New Party Nippon (NPN) and the DPJ, 
respectively. Because their seats are not up for election, there is 
a possibility that the ruling camp's majority line will be lowered. 
 
Two Upper House members leave opposition parties 
 
With the Upper House election drawing closer, stormy developments 
continued to unfold until the end in the Diet session that closed 
yesterday. 
 
NPN lawmaker Hiroyuki Arai indicated yesterday that he and Makoto 
Taki, a House of Representatives member, would leave the party to 
become independents. Arai, holding a press conference in the Diet 
building, attributed the decision to their discontent with party 
management by party head Yasuo Tanaka, saying: "The party is not in 
a situation to play up its campaign pledges in a responsible 
manner." 
 
Arai is on friendly terms with Prime Minister Abe. Arai in fact 
voted for Abe in the Diet prime ministerial election last fall. 
There has been rumor that Arai would leave the opposition bloc 
depending on the results of the Upper House election. Arai ruled out 
the option of rejoining the Liberal Democratic Party, but asked if 
he would remain as an independent even after the Upper House 
election, he said: "Under the circumstances, I cannot comment on the 
future." 
 
Shinpei Matsushita's departure from the DPJ would be more "painful" 
to the party, according to a former cabinet minister of the LDP. 
 
TOKYO 00003077  009 OF 012 
 
 
 
Matsushita, holding a press conference at the Miyazaki prefectural 
office building yesterday, announced his departure from the DPJ, 
citing his decision to back a non-DPJ candidate in the upcoming 
election. Matsushita said: "I'm right in the middle between the 
ruling and opposition blocs." 
 
In order for the ruling camp to keep a majority, it will need to win 
64 seats in the election. If Arai and Matsushita, whose seats will 
not be up for election, were to join the ruling camp, its number of 
seats not for grabs will increase from the 58 to 60, thereby 
lowering its victory line by two to 62 seats. 
 
A senior Machimura faction member of the LDP described (Arai and 
Matsushita's seats) as "valuable seats." General Council Chairman 
Yuya Niwa said high spiritedly: "We should accept anyone willing to 
join the LDP with open arms. It is desirable for a broad range of 
forces to join together in conducting politics under a two-party 
system." 
 
11) Prime Minister: Government plans to introduce social insurance 
cards in fiscal 2011 
 
NIHON KEIZAI (Top Play) (Excerpts) 
July 6, 2007 
 
In a press conference at the Prime Minister's Official Residence 
yesterday to mark the end of the ordinary Diet session, Prime 
Minister Shinzo Abe announced a package of measures the government 
will take in dealing with the pension fiasco. The prime minister 
categorically said, "The errors in pension management must be 
completely fixed by my cabinet." He revealed that the package 
includes measures to complete the checkup of unidentified pension 
records ahead of schedule and to introduce social insurance cards in 
fiscal 2011 to help uniformly manage pension payments and medical 
care data. Abe also said that he would ask voters for their judgment 
on the "credibility' of what his administration has achieved, such 
as securing of fiscal resources, in policy debate with the 
opposition camp in the run-up to the House of Councillors election. 
But he stopped short of mentioning the win-or-loss line for the 
election. 
 
The prime minister apologized for the pension problem, saying: "I 
offer my apology as the head of the administration." He then 
stressed: "The government will check all unidentified pension 
records and pay pension benefits to all people who have properly 
paid pension premiums. We will take every measure we should take." 
 
12) Prime minister indicates plan to consider consumption tax hike 
in debate in fall on tax-reform proposals 
 
NIHON KEIZAI (Page 1) (Excerpts) 
July 6, 2007 
 
Appearing on a TV program last night, Prime Minister Shinzo Abe 
indicated that the government would consider a hike in consumption 
tax in discussion in the fall on tax revision proposals for the next 
fiscal year. He said: "We will carry out a sweeping tax reform in 
the fall. I have not said at all that we will not raise the 
consumption tax." Abe made this remark in replying to a question 
about resources to fund the proposed measure to raise the rate of 
the burden that the basic pension places on the national treasury. 
 
TOKYO 00003077  010 OF 012 
 
 
 
13) Minshuto President Ozawa declares he will resign if opposition 
camp fails to win majority in Upper House election; Warns about 
optimistic mood in the party 
 
TOKYO SHIMBUN (Page 2) (Full) 
July 6, 2007 
 
Minshuto (Democratic Party of Japan) President Ichiro Ozawa 
yesterday revealed his view that he would step down from his post if 
the opposition camp failed to win a majority in the House of 
Councillors election on July 29. He had previously refrained from 
clarifying his responsibility for the outcome of the Upper House 
race. The leader of the largest opposition party vowed to fight as 
if his back was to the wall in the election to follow the end of the 
regular Diet session. 
 
In an interview with the Tokyo Shimbun and other newspapers, Ozawa 
stressed his determination for the opposition camp to trade places 
with the ruling coalition, stating: "If I cannot achieve that, it 
would be meaningless for me to remain in the party head's post. I 
have been campaigning with such a resolve." 
 
Secretary General Yukio Hatoyama and other lawmakers in Minshuto had 
 
SIPDIS 
said that Ozawa would quit his post if the party suffered a defeat 
in the Upper House race. There had been also an observation that he 
would remain in his post if the party won a large number of seats. 
 
Ozawa's declaration apparently aims to tighten up his party, in 
which an optimistic mood is now growing, as well as to keep a good 
chance for the opposition to trade places with the ruling camp. 
 
Another reason is that there were calls for the resignation of Prime 
Minister Shinzo Abe in the ruling Liberal Democratic Party (LDP) 
since Abe has not expressed his intention on the future course of 
his action in case the ruling coalition loses its majority in the 
Upper House. Hatoyama said: "The LDP has avoided talking about 
responsibility, but our leader has shown his readiness to assume 
responsibility." 
 
In the interview Ozawa also expressed his willingness to become 
prime minister if the opposition camp obtained the reins of 
government. The dominant view, however, was that Ozawa was not eager 
for the prime minister's post due to health concerns, although it is 
only natural for the leader of the largest opposition party to show 
his enthusiasm for the prime ministership. Therefore he seems to 
have determined to dispel such doubts in some in his party that the 
party can fight in the July 29 Upper House race and the next Lower 
House election under Ozawa, even though he would not become a prime 
ministerial candidate. 
 
Hatoyama made this comment about Ozawa's declaration: "He said what 
he should say." LDP Diet Affairs Committee Chairman Toshihiro Nikai, 
however, took a cooler view: "He might have said it as part of his 
election strategy." 
 
14) Close Solidarity with US in WTO negotiations; US and Japan 
officials in agreement 
 
NIKKEI (Page 5) (Full) 
July 6, 2007 
 
 
TOKYO 00003077  011 OF 012 
 
 
Yesterday during his visit to Australia, Minister of Economy, Trade 
and Industry Akira Amari met individually with US Trade 
Representative Schwab and New Zealand Minister of Trade Goff.  Amari 
and Schwab agreed to cooperate closely in order to wrap up World 
Trade Organization multilateral trade negotiations (the Doha Round) 
by the end of the year. 
 
15) Imports of US beef in June increase by 1.5 compared to the 
previous month 
 
NIKKEI (Page 5) (Full) 
July 6, 2007 
 
Imports of US beef in June reached 4311 tons - 1.5 times the amount 
of beef imported in May.  Importers view the lifting of 100 %  box 
inspection at Japanese ports in mid-June as having a big effect. 
The high demand of the summer season has also caused domestic 
companies to increase imports.  However, imports of US beef were 
still only one-fifth of pre-ban levels. 
 
The number comes from information gathered by the Farm Ministry on 
the amount of US beef that passed animal quarantine inspection in 
June.  After animal quarantine, the beef must pass through customs 
procedures, resulting in slight discrepancies between the customs 
tally and the trade tally. 
 
16) M&As of Japanese companies by foreign firms reach record high 
 
TOKYO SHIMBUN (Page 8) (Full) 
July 6, 2007 
 
It was learned yesterday that M&As of Japanese companies by foreign 
firms during the Jan.-June period reached a record high for the 
first half of the year at 146, up 87.2 %  from a year earlier. 
 
Cases in which foreign companies carried out M&As in a bid to 
strengthen their presence in Japan were noticeable, as can be seen 
in the purchase of Nikko Cordial by Citigroup. Acquisitions of 
Japanese stocks by foreign investment funds also contributed to the 
increase in M&As. Foreign capital will likely continue to target 
Japanese companies backed by the liquidity-driven global market. 
 
According to the tally (including ongoing cases, such as buyouts) 
made by Recof, an M&A research and intermediate service company, the 
total value of M&As (based on the officially announced value) in the 
reporting period reached 2.0313 trillion yen, greatly exceeding the 
544 billion yen recorded in all of 2006. The figure is a new high 
for the first half of any year. 
 
An expert in corporate mergers pointed out, "Many foreign companies 
are advancing into Japan in anticipation of the Japanese economy 
moving in a steady manner and in hopes of obtaining some of the 
abundant financial assets held by households." 
 
Given the breakdown of the M&As, 83 cases involved investment 
companies centered on investment funds (including business 
corporations aimed for investment recovery). Cases in which 
investment funds were active were also pronounced, as can be seen in 
Steel Partners Japan Strategic Fund, a US investment fund, tendering 
a takeover bid for Bull Dog Sauce. 
 
17) ANA to make Okinawa hub for Asia-bound air freight operations 
 
TOKYO 00003077  012 OF 012 
 
 
 
ASAHI (Page 2) (Full) 
July 6, 2007 
 
All Nippon Airways Co. (ANA) yesterday announced plans to use Naha 
Airport as a hub for Asia-bound air freight operations starting in 
¶2009. The company aims to increase transportation efficiency by 
collecting cargo bound for different destinations in Asia at Naha 
Airport and loading them there. 
 
The company plans to expand its air freight operations by initiating 
new cargo flights between Naha and such major Asian cities as Seoul 
and Beijing, in addition to flights between Naha and Haneda and 
between Naha and Kansai. It is considering an increase in the number 
of cargo planes from the current 4 to 10 and flying them every day. 
The company plans to load by 3:00 a.m. cargo that arrives at Naha by 
planes that leave between 9:00 p.m. and 11:00 p.m. from domestic 
airports and to have the cargo arrive at their destinations by early 
morning. 
 
Meanwhile, Japan Air Lines Co. (JAL) is expanding direct flights 
between domestic airports and major Asian cities by promoting the 
downsizing of cargo planes. The difference in the strategies of ANA 
and JAL thus has been underscored. JAL previously possessed only 12 
large cargo planes, but it introduced mid-sized aircraft on July 3. 
It plans to introduce three more next fiscal year and reduce the 
number of large ones. 
 
In the airfreight market in Asia, where growth is continuing, FedEx 
Corp. of the US and DHL of Germany have established vast networks, 
enjoying large market share there. These giant rivals have offered 
customers next-day delivery and other services by using Shanghai 
Airport and Guangzhou Airport as hubs. In the Asia cargo market, 
competition is expected to heat up further. 
 
SCHIEFFER