VZCZCXRO6375
RR RUEHFK RUEHNAG RUEHNH
DE RUEHKO #3127/01 1900857
ZNR UUUUU ZZH
R 090857Z JUL 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 5310
RUEAIIA/CIA WASHDC
INFO RUEHFR/AMEMBASSY PARIS 5613
RUEHFK/AMCONSUL FUKUOKA 1954
RUEHNAG/AMCONSUL NAGOYA 1053
RUEHNH/AMCONSUL NAHA 4374
RUEHOK/AMCONSUL OSAKA KOBE 5538
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 04 TOKYO 003127 
 
SIPDIS 
 
PARIS PLEASE PASS TO USOECD 
STATE PLEASE PASS TO USTR 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD ECON JA ZO EAGR
SUBJECT: The Japan Economic Scope--July 5, 2007 Part 2 
 
Sensitive but unclassified.  Please protect accordingly. 
 
¶1. (U) This cable contains part two of the Japan Economic 
Scope from July 5, 2007. 
 
2.(SBU) Table of Contents 
 
¶3. JBIC Will Finance Pipe Manufacturing in Russia 
Autos, Energy 
¶4. International Auto Standards and ACCJ Japan American Auto 
Industries Subcommittee 
¶5. Nissan on Exchange Rates, Overseas Investments, Environment 
¶6. The First GUAM Plus Japan 
¶7. New Officers in Econ Section 
¶8. New Intern Antonio Gonzales 
¶9. Fourth of July Celebration 
¶10. Red Sox Japanese Imports Thriving at Season's Halfway Point 
¶11. Kei Igawa Loses to Oakland 
¶12. U.S.-Japan Baseball Relations 
 
¶3.  (SBU) JBIC Will Finance Pipe Manufacturing in Russia 
--------------------------- 
 
Japan Bank for International Cooperation (JBIC) announced that on 
July 2 it signed a bank loan contract with the Joint-Stock Bank 
of the Gas Industry "Gazprombank," Russia's third largest 
commercial bank. 
 
The loan promises up to 10 billion yen worth of co-financing with 
Mizuho Corporate Bank and will be used by Gazprombank to finance 
UralTrubprom's purchase of a seam-welded pipe manufacturing 
facility currently owned by Mitsubishi Corp., Nakata MFG.Co., LTD 
and Mitsubishi Hitachi Metals Machinery. 
 
By promoting the export of a Japanese pipe manufacturing facility 
based on Japan's top technology, JBIC hopes to contribute to the 
development of Russia's manufacturing sector. 
JBIC has been proactively promoting Japanese plant exports by 
offering bank loans to Russian commercial banks.  (ECON: Eriko 
Marks) 
 
¶4.  (SBU) International Auto Standards and ACCJ Japan American 
Auto Industries Subcommittee 
--------------------------- 
 
The Japan Automobile Standards Internationalization Center 
(JASIC) has kicked off its activities for developing a whole 
vehicle type approval system (WVTA) according to a Japan 
Automobile Importers Association (JAIA) presentation to the ACCJ 
American Auto Industries Subcommittee meeting on July 5. 
 
A JASIC-WVTA steering committee has been created and the goal is 
to reach a consensus in 2009 and report Japan's views to the 
WP.29 in 2010, said JAIA.  JASIC would seek to enforce the system 
by 2015 -- which is also the year that Japan is seeking to 
harmonize emissions standards. 
 
A key issue before the steering committee is the comparison of 
European and Japanese homologation application documents to 
develop a harmonized set.  U.S. automaker reps at the ACCJ 
meeting commented that they remained worried about this trend of 
convergence of European and Japanese standards.  It may force U.S. 
automakers to import cars from Europe not because of a better 
value or consumer interest but because of the regulatory 
environment. 
 
In addition, although importing cars from Europe may be one way 
to address this constraint, they noted that this solution is not 
one that the U.S. government may wish to endorse. 
 
Some of the other issues the steering committee will wrestle with 
are definitions and metrics for measurements.  For example, in 
Japan a passenger car is defined as carrying 10 or fewer people, 
while in Europe it is nine or fewer.  In terms of weight, whether 
to count the car as empty or full will need to be decided, and, 
if full, whether an average passenger weight of 55 kg (Japan), 68 
kg (U.S.) or 75 kg (Europe) will be used. 
 
The ACCJ subcommittee also discussed Japan's new fuel efficiency 
standard; Japanese regulations covering explosives, which will 
affect airbags in cars sold in Japan; auto battery recycling 
 
TOKYO 00003127  002 OF 004 
 
 
regulations; and active safety measures. 
 
Separately the Diet passed a revision of the Road Traffic Law on 
June 13 that requires the wearing of rear seatbelts.  A 
supplementary resolution was also passed that called on the 
relevant ministries to direct industries to develop accident 
avoidance systems such as alcohol interlock with alcohol detector 
and a drive recorder that keeps image data before and after the 
collision.  (ECON:  Josh Handler) 
 
¶5.  (SBU) Nissan on Exchange Rates, Overseas Investments, 
Environment 
----------- 
 
We met with Nissan motors representatives on July 3 to discuss 
the weak yen, their U.S. plant decisions, and emissions and fuel 
efficiency plans. 
 
On the weak yen, the Nissan representatives told us that to guard 
against exchange rate risk -- in the mid-1990s the yen was strong 
and not to Japan's automakers advantage, they noted -- Nissan 
tries not to base its production decisions or profitability on 
exchange rates. 
 
The representatives explained that over 80 percent of Nissan 
vehicles sold in North America are produced in the United States 
or Mexico.  In case of Europe, over 60 percent are locally 
assembled in such places as Spain. 
 
The Nissan reps said that Nissan is not able to switch production 
between the United States and Japan as there are distinct models 
in the two markets.  Other Japanese companies, they said, can 
switch production to take advantage of the exchange rate as they 
have a dual production system, where products are interchangeable. 
They remarked that Nissan should not be blamed for any of the 
trade imbalances as Nissan is not exporting more to the United 
States. 
 
According to the Nissan reps, the incentive package from state 
governments and the available workforce are important factors in 
deciding on where to build plants in the United States. 
The Nissan reps noted that Japanese companies have come to expect 
tax breaks, help with land, and assistance with training, etc. 
They were not certain if the State of Michigan could offer 
attractive incentives to a Japanese auto manufacturer.  On the 
other hand, they noted that Nissan has a technological center in 
Michigan.  The states where Nissan has plants do not have many 
auto engineers, while Michigan is still a center of automotive 
engineering and design. 
 
Nissan announced in December 2006 a "Nissan Green Program 2010" 
which outlined Nissan's plans to reduce emissions and increase 
fuel efficiency. 
 
Commenting on the plan, the representatives noted that improved 
batteries are the key to improved hybrid technology and electric 
cars.  Nissan's recently announced partnership with NEC to 
develop a next generation lithium-ion batter for auto use is 
central to Nissan developing its own hybrid engine technology. 
Nissan currently does not have its own hybrid engine and it is 
purchasing engines from Toyota to put in the Altima for sale in 
the United States. 
 
Nissan is also committed to pursuing clean-diesels for the 
Japanese, European and U.S. markets.  Nissan thinks that tax 
incentives will be needed in Japan to encourage the market. 
The Nissan reps noted the Agriculture Ministry's plans for 
ethanol production and use in Japan are unrealistic and they do 
not think that ethanol will be widely available in Japan soon. 
They reported, however, that Nissan vehicles already on sale in 
Japan can handle up to E3 fuel and in the United States and 
Europe up to E10.  In addition, they have E85 vehicles for the 
U.S. market. 
 
Nissan is also investing in fuel cell technology.  Nissan like 
other auto companies has managed to engineer the power train into 
a regular sized car.  The cost, however, of each vehicle remains 
prohibitive.  Nissan is working to reduce the cost, but they said 
it would be difficult. 
 
Commenting on the U.S. scene, they said the fuel efficiency 
 
TOKYO 00003127  003 OF 004 
 
 
standards being considered in Congress would be a challenge to 
meet.  (ECON:  Josh Handler) 
 
¶6.  (U) The First GUAM Plus Japan 
---------------------------------- 
 
On June 19, the GUAM (Georgia, Ukraine, Azerbaijan and Moldova) 
countries ended their summit with a joint statement confirming 
security cooperation in the region.  In addition, President 
Aliyev of Azerbaijan announced that crude oil from the Caspian 
Sea will be supplied to the pipeline between Ukraine and Poland. 
On June 18, Deputy Minister for Foreign Affairs Mitoji Yabunaka 
met with the Foreign Ministers and/or Vice Ministers of GUAM 
countries in Baku for the first time.  At the meeting, the 
participants agreed to strengthen the relationship in the 
framework of "GUAM Plus Japan". 
 
Yabunaka proposed the establishment of a working level energy 
conservation workshop within the framework starting JFY 2007, 
while GUAM countries showed great interest in Japanese investment 
particularly in energy and transportation.  Yabunaka expressed 
interest in making "GUAM Plus Japan" a regular meeting. Click 
here for the joint press statement.  (ECON: Eriko Marks) 
 
¶7.  (U) New Officers in Econ Section 
--------------------------- 
 
The Econ section welcomes Charlotte "Charlie" Crouch and Carrie 
Bergstrand.  Charlotte hails from California and has served in 
Panama as the Pol/Mil officer and South Korea as a consular 
officer.  Her portfolio includes aviation, distribution of postal 
privatization and import controls. Prior to joining the service, 
Charlie served 13 years as a Marine Staff Sergeant in both the 
U.S. and Japan. 
 
Carrie hails from Wisconsin, and before coming to Embassy Tokyo, 
she completed one year language training at FSI Yokohoma.  Her 
portfolio includes export controls and Latin America.  Prior to 
joining the service, Carrie managed a Foreign Exchange Program. 
(Econ: Virsa Hurt) 
 
¶8.  (U) New Intern Antonio Gonzales 
--------------------------- 
 
The Tokyo Economic Section welcomes Antonio Gonzalez.  Gonzalez 
is a graduate student at the University of California, San 
Diego's Graduate School of International Relations and Pacific 
Studies and will be with us for the next ten weeks.  His 
portfolio will include bilateral FTAs, the Trade Forum, and 
corporate governance. 
 
Gonzalez learned Japanese while working in the Kansai area, and 
he also speaks Spanish.  On a professional level, his interests 
include finance, economics, and investment analysis in Japan and 
the Latin American region, as well as energy economics 
(specifically biofuels). 
 
On a more personal note, Gonzalez enjoys martial arts (Aikido, 
Judo, and Capoeira), hiking, and rock climbing.  He can be 
reached at TMPGonzalezA@state.gov.  (ECON: David DiGiovanna) 
 
¶9.  (U) Fourth of July Celebration 
--------------------------- 
 
The 231st Fourth of July celebration, held at the Ambassador's 
residence, hosted close to 1,600 people from the American, 
Japanese and International community.  In addition to foreign 
dignitaries, Japanese government officials, and the U.S. business 
people, other special guests included Tokyo Disneyland's own 
Mickey and Goofy and even Uncle Sam himself came to join in the 
festivities.  Musical entertainment included the Pacific Air 
force Band, the Nemunoki Children's Choir and a special 
appearance by the King of Rock-n-Roll, Elvis Presley. 
The food menu appeared to be endless as tables of BBQ hotdogs, 
hamburgers, fruits, and other delicious goodies filled the 
walkways. Vendors including Starbucks, Quizno's Subs, Dominos, 
Coldstone's Creamery, and Krispy Kreme donuts added to the 
festivities and brought a touch of the United States. 
Ambassador Schieffer and Mrs. Schieffer as well as the Embassy- 
wide community worked together to make this one of the most 
successful, patriotic, and fun-filled Fourth of July celebrations. 
 
TOKYO 00003127  004 OF 004 
 
 
 
(Econ: Virsa Hurt) 
 
¶10.  (U) Red Sox Japanese Imports Thriving at Season's Halfway 
Point 
----- 
 
Japanese imports Daisuke Matsuzaka and Hideki Okajima continue to 
thrive in Boston.  Matsuzaka logged another dominating 
performance against Akinori Iwamura and the Tampa Bay Devil Rays 
on the Fourth of July.  He struck out eight and left the game 
after eight scoreless innings.  The Red Sox won 4-1.  In his last 
six starts, Matsuzaka has given up only six runs. 
 
His Japanese teammate on the Red Sox, Hideki Okajima, meanwhile 
continues to make a good case that he is the best relief pitcher 
in baseball.  He has appeared in ten straight games without 
giving up a run since June 3, and his earned runs average is now 
at 0.88. 
 
In a separate development, the Associated Press reported on July 
4 that the Red Sox have signed a "strategic alliance" with the 
Chiba Lotte Marines of Japan's Nihon Pro League (NPL).  According 
to the report, the two teams will share player evaluations, 
statistical analysis, and possibly engage in player exchanges at 
the minor league level. (ECON: Nicholas Hill) 
 
¶11.  (U) Kei Igawa Loses to Oakland 
--------------------------- 
 
The Yankees $46 million pick up imploded June 30 under a wilting 
sun at Yankee Stadium.  The home team lost to the visiting A's 
and dropped four games under 500.  Igawa's record in New York 
dropped to 2-2, and his ERA is 6.91. 
 
Only the sushi restaurant owners of Scranton/Wilkes-Barre are 
smiling -- with the prospect that their favorite son could return 
to pitch in the southeast Pennsylvania baseball hotbed, bringing 
back scores of Japanese fans in his wake. 
 
Igawa pitches again for the big club on July 5, a day after the 
Yankees lost 6-2 to Minnesota -- George Steinbrenner's birthday - 
- and dropped 12 games back of the Red Sox.  (ECON: Nicholas 
Hill) 
 
¶12.  (U) U.S.-Japan Baseball Relations 
--------------------------- 
 
Listener on Line 2:  That nice intern told me I was on hold for 
'Car Talk' - how did I get re-directed to THIS show?  But since 
I'm on the air, I'm worried about the rapidly deteriorating U.S- 
Japan balance of trade in baseball services.   Many point the 
finger at excessive competition in the AL East Division 
(www.ThereGoThoseALEastCraziesAgain.com) - what gives? 
Signed, 
 
Editor's reply: Thank you for your views.  We are gratified to 
have such a large readership in Enid.  We only regret that we 
don't have enough space available to answer all the letters we 
receive from there. 
SCHIEFFER