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UNCLAS SECTION 01 OF 12 TOKYO 003276 
 
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 07/18/07 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule 
 
Niigata-Nagano earthquake: 
4) Ambassador Schieffer announces US offer of $100,000 relief to 
quake victims 
5) TEPCO's nuclear power plant had 50 incidents due to quake, 
including small radiation particles leaking into air 
6) Prime Minister Abe criticizes TEPCO for slowness in reporting on 
quake damage 
7) Opposition parties worried about impact on Upper House election 
of Niigata-Nagano earthquake 
 
Election run up: 
8) Yomiuri's pre-election survey portends ruling camp's loss of 
majority in the Upper House 
9) Yomiuri poll: Abe Cabinet support rate sinks below the 30 % line, 
with 78 % of voters expressing "interest" in the upcoming election 
10) Nikkei net survey shows rapidly rising voter interest in the 
political scandals plaguing the Abe administration 
11) Minshuto (Democratic Party of Japan) fears it may not make the 
target in the election of winning 55 seats 
12) Ruling camp worried about 10 % jump in early voting (absentee 
votes), compared to last election 
13) LDP's Koichi Kato, titular leader of liberal wing of the LDP, 
blasts Abe diplomacy as "old-fashioned" 
 
Defense and security: 
14) PACOM Commander Keating meets Foreign Minister Aso, Defense 
Minister Koike 
15) Adm. Keating in meeting with Koike steers clear of issue of 
providing FX information 
 
North Korea problem: 
16) Six-party talks on North Korea start today with participation of 
chief delegates 
17) US, DPRK's conciliatory mood evident at start of six-party 
talks, leaving Japan with a feeling of isolation 
 
18) WTO farm negotiations: New chairman's proposal for lowering 
tariffs would be harsh on Japan 
 
19) Still BSE skittish, Japanese consumers, despite dropping prices, 
continue to stay clear of US beef 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Fault that caused Niigata quake found to extend below nuclear power 
plant 
 
Mainichi: 
Cold rain pours on 9,000 evacuees in areas hit by quake in Niigata 
for second night 
 
Yomiuri: 
Ruling coalition may lose majority in Upper House election 
 
TOKYO 00003276  002 OF 012 
 
 
 
Nikkei: 
METI prepares guidelines for fair implementation of management 
buyout 
 
Sankei & Tokyo Shimbun 
TEPCO reports 50 problems at nuclear plants after quake 
 
Akahata: 
JCP engaged in fund-raising activities for quake-hit residents 
 
2) EDITORIALS 
 
Asahi: 
(1) Problems at power plants in quake: Thorough safety measures 
urged 
(2) Government's role: Use wisdom of market to resolve pension mess 
 
Mainichi: 
(1) Quake & power plants: Make utmost efforts to ensure safety 
(2) Illegal manipulation on achievement test: Think more about 
children 
 
Yomiuri: 
(1) Education reform: Discussion needed from long-term viewpoint 
(2) Police white paper: Enhance efforts to cut off gangsters' 
financial resources 
 
Nikkei: 
(1) Strengthen quake-resistance standards for nuclear power plants, 
prepare better safety measures 
(2) Relations between Britain, Russia rapidly cooling 
 
Sankei: 
(1) Full consideration must be given to the weak in quake-hit area 
(2) Don't allow gangsters' funds to flow into securities market 
 
Tokyo Shimbun: 
(1) Government must present stricter quake resistance standard for 
power plants 
(2) Eliminate financial sources and guns for gangsters 
 
Akahata: 
(1) 2007 Upper House election & farm villages: JCP determined to 
take policy to resuscitate agriculture, guarantee food safety 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime minister's schedule, July 17 
 
NIKKEI (Page 2) (Full) 
July 18, 2007 
 
07:54 
Attended a meeting of the Strategic Council to Think about the 
Future of Food at Kantei. 
 
08:06 
Met with MOFA Asian and Oceanian Affairs Bureau Director-General 
Sasae. Afterwards, attended a monthly economic meeting of relevant 
cabinet members. 
 
 
TOKYO 00003276  003 OF 012 
 
 
09:01 
Attended a cabinet meeting. Afterwards, met with Minister of 
Internal Affairs and Communications Suga. 
 
10:11 
Met with Cabinet Intelligence Director Mitani and then Deputy Chief 
Cabinet Secretary for Crisis Management Noda. 
 
13:11 
Met with Deputy Chief Cabinet Secretary Matoba. 
15:03 
Attended a meeting of relevant bureau directors-general on the 
Chuetsu earthquake in Niigata Prefecture. 
 
15:57 
Met with House of Representatives member Yoshiaki Harada at LDP 
headquarters. 
 
17:00 
Met with LDP Policy Research Council Chairman Nakagawa. 
 
18:30 
Filmed message for the international exchange student program "Japan 
Tent." 
 
19:07 
Arrived at Kantei residence. 
 
4) US offers $100,000 in relief to quake victims 
 
SANKEI (Page 5) (Full) 
July 18, 2007 
 
The Ministry of Foreign Affairs announced that the US government 
will extend $100,000 in relief aid to help the victims of the 
Chuetsu earthquake in Niigata Prefecture. US Forces Japan (USFJ) 
also made an offer of goods to Japan. The Japanese government 
intends to accept these offers. When another earthquake hit Niigata 
in October 2004, the US likewise extended $50,000 in relief aid and 
offered 10,000 plastic sheets. 
 
5) TEPCO reports 50 problems at nuclear power plants, radioactive 
substances emitted into atmosphere 
 
ASAHI (Page 1) (Slightly abridged) 
July 18, 2007 
 
Tokyo Electric Power Co. (TEPCO) announced yesterday that inspectors 
discovered radioactive substances emitted into the atmosphere from 
the main exhaust pipe at the No. 7 nuclear reactor of its 
Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture after 
the plant was hit by a major earthquake. The company also reported 
that a total of 50 problems were found at the seven reactors in the 
power plant, such as 100 drums containing low-level nuclear waste 
falling over and water leaking from a conduit pipe. The July 16 
quake exposed the unexpected weak points of a nuclear power plant. 
 
After the earthquake, inspectors checked possible radiation leaks at 
the seven reactors yesterday afternoon. As a result, iodine, 
chromium, and cobalt were detected from the No.7 reactor. 
 
According to TEPCO, the amount of substances emitted into the 
 
TOKYO 00003276  004 OF 012 
 
 
atmosphere was an estimate 300 million vectors, about one-thousandth 
of the amount allowed by safety regulations, so there will be no 
harmful effect on the environment. Radioactive substances are not 
usually leaked out of the plant. It remains unknown why they were 
emitted into the air. 
 
At the No. 1-5 reactors, the shifting of an exhaust duct was 
discovered, but the possibility is reportedly slim that radioactive 
water was leaked. 
 
About 100 drums containing low-level nuclear waste fell over at a 
warehouse, and the lids on several drums came off. In inspecting the 
floor, TEPCO detected 0.5 vectors of radiation per square meter. A 
total of 22,000 drums are stored at two warehouses. 
 
At the No. 6 reactor, water containing a small amount of radiation 
flowed into the sea through the ditch from the spent fuel pool on 
July 16. On this problem, although the roof is still leaking, the 
outflow of water stopped, according to TEPCO. In addition, seven 
other transformers besides the one that caused the fire just after 
the earthquake were found damaged. 
 
A TEPCO spokesperson said: "Other transformer fires could have 
broken out. Our system for putting out fires did not properly 
function. We must improve our safety system, including antiseismic 
reinforcement construction work." 
 
6) TEPCO reports late, PM offers strong criticism 
 
TOKYO SHIMBUN (Page 1) 
July 18, 2007 
 
Regarding the spate of problems surrounding the Tokyo Electric Power 
Co. (TEPCO) as a result of the Niigata Chuetsu earthquake, in 
particular the leakage of radioactive water from TEPCO's 
Kashiwazaki-Kariwa nuclear power plant, Prime Minister Shinzo Abe 
yesterday afternoon offered strong criticism: saying "(TEPCO's) 
reports were late. I have given them a sharp reminder that these 
types of reports must be made rigorously and with haste.We must have 
them reflect on their actions." The prime minister emphasized: 
"Nuclear plants cannot operate without the citizens' trust. Speedy 
reporting and disclosure of information are necessary in order to 
obtain this trust." 
 
7) Earthquake off Chuetsu region: Opposition parties are limited in 
what they can do to make quick response; Concern about impact on 
upcoming Upper House election 
 
TOKYO SHIMBUN (Page 2) (Full) 
July 18, 2007 
 
Opposition parties are concerned about a possible political impact 
of the earthquake that occurred off the Chuetsu area of Niigata 
Prefecture. They are making a public appeal about their quick 
responses to the disaster, as if to compete with Prime Minister Abe, 
by dispatching senior officials to quake-stricken areas. However, 
what they can do and their media exposure are naturally limited. 
 
Senior opposition party members yesterday visited various disaster 
sites. Democratic Party of Japan (DPJ or Minshuto) Secretary General 
Yukio Hatoyama yesterday afternoon inspected Tokyo Electric Power 
Co.'s (TEPCO) Kashiwazaki-Kariwa Nuclear Power Plant, where water 
 
TOKYO 00003276  005 OF 012 
 
 
containing radioactive substance has spilled out. He also visited 
evacuees at a primary school in Kashiwazaki City. DPJ head Ichiro 
Ozawa, acting head Naoto Kan and Hatoyama met at the party 
headquarters in the afternoon. They agreed to call on the ruling 
camp to set up a Lower House disaster countermeasures special 
committee. 
 
Japanese Communist Party Chairman Kazuo Shii took part in an 
on-the-street campaign to raise funds for disaster victims. The 
Social Democratic Party (SDP) dispatched an investigation team led 
by party head Mizuho Fukushima to Kashiwazaki City. Deputy Secretary 
General Masaki Itokawa of the People's New Party (PNP) inspected the 
damaged shopping district in the city. 
 
However, some opposition party members complained that once a 
disaster occurs, it works to the advantage of the ruling camp, as a 
DPJ source put it. No matter how hard the opposition camp tries to 
listen to the voices of victims at disaster sites, it is the 
government and the ruling camp that take concrete measures from the 
standpoint of the state. Voters pay attention to the ruling parties, 
submerging the presence of the opposition parties. 
 
Chances are that the pension flap, which the opposition parties 
intend to use as the greatest ammunition in the Upper House 
election, might lose its impact. Criticizing the government for its 
response to the issue could give the impression that the opposition 
camp's themes are working as a drag if they overdo it. 
 
With the sluggish approval ratings for the Abe cabinet in mind, one 
senior DPJ official said, "The earthquake this time will not work in 
favor of the opposition camp, but its impact will not be so great as 
to change the current trend." However, there is a growing concern 
that a natural disaster, an incident that has been most afraid of, 
has occurred, as a mid-ranking DPJ member said. 
 
8) Upper House election situation survey: Ruling coalition may lose 
its majority; DPJ moving to become number one party; LDP facing 
tough races in single-seat districts 
 
YOMIURI (Top play) (Excerpt) 
July 18, 2007 
 
Prior to the 21st election for the House of Councilors on July 29, 
the Yomiuri Shimbun carried out a nationwide opinion poll in order 
to gauge the election situation, backed up by the results of 
coverage by all the daily's local branches.The Liberal Democratic 
Party (LDP) is facing tough battles in the single-seat districts and 
other election districts, and the party lacks momentum in the 
proportional representation segment, as well. The New Komeito, too, 
is having difficulty gaining seats, so the possibility is strong 
that the opposition parties could secure 122 seats, or the majority 
line in the Upper House. It appears that voters are reacting 
strongly to such issues as missing pension records. The Democratic 
Party of Japan (DPJ or Minshuto) is moving ahead in both the 
district and proportional races, and the likelihood is that it may 
become the number one party in the Upper House, adding the seats 
that were not up for election. However approximately 50 % of the 
voters have not made up their minds about who to vote for in the 
district races, and approximately 30 % have not settled on which 
party to vote for in the proportional races. So until the day of the 
election, there remains a possibility that the situation could 
change again. 
 
TOKYO 00003276  006 OF 012 
 
 
 
9) Yomiuri poll: 78 % express "interest" in Upper House election; 
Abe Cabinet support rate sinks below 30 % line 
 
YOMIURI (Page 1) (Excerpt) 
July 18, 2007 
 
In a telephone-based nationwide opinion poll carried out by the 
Yomiuri Shimbun on July 14-16, 78 % of the respondents expressed 
either great or some "interest" in the upcoming Upper House 
election. This is a 13-point jump from the level of interest (65 %) 
in the Upper House election expressed in a poll in 2004. Just 
looking at those expressing "great interest" in the election, there 
was a 15-point jump. On the question of whether the voters would "go 
to the polls without fail," 70 % answered affirmatively, slightly 
down from the 73 % who chose this answer in 2004. This reveals that 
interest in the election and actually desiring to vote are not 
necessarily linked. 
 
10) Net poll on priority policies ahead of Upper House election: 
Question of "politics and money" rises to second due to Akagi 
scandal 
 
NIKKEI (Page 3) (Abridged slightly) 
July 18, 2007 
 
The results of the third Internet-based opinion poll ahead of the 
July 29 House of Councillors election showed changes in respondents' 
answers to a question asking their priority polities. Measures 
against the pension payment recordkeeping errors have constantly 
taken the top place since the first poll three weeks ago. At the 
same time, the question of "politics and money" scandals came in 
second in the latest poll, surpassing medical and nursing care and 
welfare. The question of politics and money has been drawing much 
attention due to Agriculture Minister Norihiko Akagi's shady office 
expenses and other issues. 
 
In the survey, 61 % of respondents pointed out measures against the 
pension fiasco as their top priority. Although this figure was far 
greater than other issues, it dropped 2  percentage points from the 
previous poll a week ago. 
 
The question of politics and money increased 6  percentage points to 
53 %, and medical and nursing case and welfare dropped 3  percentage 
points to 49 %. 
 
Akagi's office expenses scandal broke out on July 7 in the middle of 
the previous poll (July 6-9). Prime Minister Shinzo Abe clearly 
defended Akagi following his explanation. But voters are still 
paying high attention to it, given the opposition parties' calls for 
his voluntary resignation or Abe's dismissal of him. 
 
In the previous regular Diet session, the ruling bloc successfully 
enacted the revised Political Funds Control Law requiring political 
fund-management organizations to attach receipts to their fund 
reports for every item costing 50,000 yen (excluding labor costs). 
In response to a question asking if voters highly evaluate a series 
of measures taken by the ruling camp, including the law revision, 
'yes' dropped 5  percentage points to 28 %, while 'no' increased 6 
percentage points to 65 %. 
 
The positive evaluation of the government and ruling bloc's measures 
 
TOKYO 00003276  007 OF 012 
 
 
against the pension fiasco also decreased 5  percentage points to 44 
%, while the negative evaluation increased 3  percentage points to 
40 %. 
 
Asked for a desirable administration after the election, those 
pointed to a non-LDP coalition administration led by the Democratic 
Party of Japan accounted for 37 % of the total, an increase of 2 
percentage points. A coalition administration by part of the LDP and 
the DPJ came in second at 24 %, down 1  percentage point, followed 
by a coalition administration led by the LDP and the New Komeito at 
12 %, down 2  percentage points. An LDP administration marked 7 %, 
the same as the last time. 
 
Asked if they were "interested" in the Upper House election, 49 % of 
respondents said they were strongly interested, up 3  percentage 
points, while 39 % said they were interested to some extent, down 2 
percentage points. In other words, a total of 88 % of respondents 
said they were interested in the election. 
 
11) Minshuto President Ozawa believes party will fall short 
 
ASAHI (Page 4) (Full) 
July 18, 2007 
 
Minshuto (Democratic Party of Japan) President Ichiro Ozawa, Acting 
President Naoto Kan, and Secretary General Yukio Hatoyama yesterday 
discussed election strategy for the middle and later stages of the 
campaign for the July 29 House of Councillors election based on the 
results of its internal polling. Hatoyama said, "Campaign efforts in 
some districts are insufficient." Ozawa then took a severe view, 
saying, "Under these circumstances, we won't be able to attain our 
goal of winning 55 seats. 
 
After the meeting, Hatoyama told reporters: "We will reschedule our 
campaigns focusing on electoral districts where we are fighting head 
to head. We are not allowed any optimism." 
 
Ozawa is in charge of stumping in the prefectural electoral 
districts in the Tohoku region. Minshuto has stepped up its support 
in Tochigi Prefecture and the Hokuriku area, with Hatoyama saying, 
"We are doing a good job." It intends to add efforts to the 
campaigning in the Chugoku, Shikoku, and Kyushu regions, where the 
party is engaged in tough battles. Over the weekend senior party 
members will deliver speeches in three to five districts in which 
the party is fielding two candidates. 
 
The largest opposition party will bring up the pension record 
fiasco, as well as issues involving money and politics, including 
the money scandal involving Agriculture Minister Akagi. 
 
Hatoyama indicated that his party would refrain from carrying out 
election activities in Niigata Prefecture where a severe earthquake 
occurred. He stated: "We should consider that disaster victims may 
take our activities as performances for winning the election." 
 
12) Absentee voting rate increases by 10 % over 2004 Upper House 
election 
 
ASAHI (Page 4) (Excerpts) 
July 18, 2007 
 
The ruling and opposition parties are now paying attention to the 
 
TOKYO 00003276  008 OF 012 
 
 
turnout of early voting for the July 29 House of Councillors 
election. The reason is that the level of absentee voting will 
likely become an indicator forecasting the results of the Upper 
House race. According to an interim announcement on a poll conducted 
on July 13-15 by the Ministry of Internal Affairs and Communications 
(MIAC), the number of voters (in the prefectural electoral 
districts) totaled 683,046, up 10.46 % from that of the 2004 
election. Some in the ruling camp praise the increase as a result of 
their calling on voters to cast their votes earlier than due, since 
July 29 will be the first Sunday after schools close and children 
begin their summer holiday period. But a senior New Komeito member 
said, "A high turnout rate will not be good for us." 
 
In the previous Upper House election, although 7.17 million people 
cast their votes earlier than the voting date, the turnout for the 
poll (in the electoral districts) was 56.57 % or the fourth lowest 
in the postwar period, since the voter turnout on election day 
remained low. In the 2005 House of Representatives polls, there were 
9.96 million absentee voters. The voter turnout was 67.51 % (in the 
single-seat constituencies), the highest rate since 1996 when the 
mixed electoral system of small and proportional representation 
constituencies was introduced. 
 
One of the ruling Liberal Democratic Party (LDP) executive members 
sees the increase in the absentee voting rate this time around as 
favorable, saying: 
 
"The organizations of candidates running in the proportional 
representation segment also are working well compared to the 
elections three and six years ago. Such is more than we expected. 
Some offices have already telephoned to voters asking whether they 
have voted or not." 
 
The senior New Komeito member commented: "The number of absentee 
votes may exceed 10 million." 
 
13) Kato criticizes Abe's diplomatic sense as outdated 
 
YOMIURI (Page 4) (Full) 
July 18, 2007 
 
Former Liberal Democratic Party Secretary General Koichi Kato in a 
speech in Tokyo yesterday expressed his hope for a shift in foreign 
policy by means of a change of prime minister, saying: "The pendulum 
always swings (from right to left). The country's foreign policy 
will regain balance if a well-balanced person becomes prime 
minister." Kato also harshly criticized the government's North Korea 
policy, saying: "Prime Minister Abe and Foreign Minister Aso's 
diplomatic senses are too ideological and outdated. They should 
guide a country of that sort (North Korea) into the right path. They 
have lost sight of the larger trend." 
 
14) Close Japan-US cooperation confirmed for US force realignment 
 
YOMIURI (Page 4) (Full) 
July 18, 2007 
 
US Pacific Command Commander Timothy Keating, now visiting Japan, 
met separately yesterday with Foreign Minister Taro Aso and Defense 
Minister Yuriko Koike. As a result, they confirmed that Japan and 
the United States would continue cooperating closely in implementing 
missile defense and the realignment of US forces in Japan. In his 
 
TOKYO 00003276  009 OF 012 
 
 
meeting with Koike, Keating expressed a sense of alarm toward 
China's military buildup, saying: "Although military leaders have 
stressed that the military buildup is for self-defense, we must keep 
an eye on military modernization in China." 
 
15) Adm. Keating avoids stating whether US will provide Japan with 
FX information 
 
ASAHI (Page 4) (Full) 
July 18, 2007 
 
Defense Minister Yuriko Koike met yesterday with visiting Admiral 
Timothy Keating, commander of the US Pacific Fleet. Regarding a 
next-generation main combat fighter, for which Japan plans to pick a 
model, Koike called on Keating to provide information on the 
state-of-the-art stealth fighter F-22 Raptor, saying, "I would like 
your full cooperation so that we can study the fighter's 
capabilities." 
 
The US Congress prohibits exports of the F-22 for military security 
information protection. Keating stopped short of clarifying whether 
the United States would comply with her request, saying, "We would 
like to study together with Japan what's important for Japan and our 
future." 
 
16) Chief delegates to six-party talks to meet today 
 
MAINICHI (Page 6) (Full) 
July 18, 2007 
 
Akiko Horiyama, Beijing 
 
The six-party talks aimed at resolving the North Korean nuclear 
issue will hold a two-day session of their chief delegates in 
Beijing and discuss a full declaration of nuclear programs and 
disablement of nuclear facilities. The chief delegates from the six 
countries, including US Assistant Secretary of State Christopher 
Hill, arrived in Beijing one after the other. Japan's chief 
delegate, Kenichiro Sasae, director-general of the Foreign 
Ministry's Asian and Oceanian Affairs Bureau, told reporters in 
Beijing: "I think the meeting will begin with questions about North 
Korea's view about disablement." 
 
Bilateral talks between the chief delegates of the United States and 
North Korea, between Japan and the US, and between Japan and South 
Korea were held yesterday for prior coordination of views ahead of a 
session of the chief delegates. Referring to Japan-DPRK talks, Sasae 
said, "We are ready to respond to talks," but no bilateral talks 
with North Korea were arranged. 
 
The focus of the chief-delegate session is on what the North Korean 
delegate will say about the DPRK's highly-enriched uranium (HEU) 
program. North Korea is likely to call on the US to delist it from 
the state sponsors of terrorism and provide a light water reactor. 
The six-party talks will resume for the first time since March, when 
they went into recess over the issue of how to handle North 
Korea-related money at Banco Delta Asia in Macao. 
 
17) US, DPRK stress reconciliation, making clear their stance of 
leading "six-party talks" 
 
SANKEI (Page 7) (Full) 
 
TOKYO 00003276  010 OF 012 
 
 
July 18, 2007 
 
Takashi Arimoto, Toshu Noguchi, Beijing 
 
On the eve of a session of the chief delegates to the six-party 
talks on the North Korean nuclear issue, the US and North Korean 
delegates yesterday visited their respective embassies in Beijing 
and stressed their reconciliatory mood, thereby making clear that 
they would now take the lead in the multilateral talks. The 
implementation of the six-party agreement that included the North's 
shutdown of its nuclear facility and the lifting of the freeze on 
North Korea's funds has helped to restart the six-party talks. 
However, given that the US and North Korea have been until recently 
at odds over the "next-phase steps," such as (abolition) of highly 
enriched uranium (HEU) nuclear programs, "The test starts now," US 
Assistant Secretary of State Christopher Hill said. 
 
"We are in the same ballpark," Hill told reporters last night and 
stressed that there was no big difference between him and North 
Korean Vice Foreign Minister Kim Kye Gwan in terms of aiming for 
progress on the "next-phase steps." 
 
Earlier in the day, Kim visited the US Embassy in Beijing and had a 
short meeting with Hill. Afterwards, the two officials dined 
together at a Szechuan Chinese food restaurant nearby. After lunch, 
Hill visited the North Korean Embassy in Beijing. 
 
Hill appears to be making up for the delay until now by producing 
results as quickly as possible, since the Bush administration's 
remaining term of office is onlya year and a half. The mutual visits 
to the embassies yesterday are viewed as part of the 
"confidence-building efforts," following Hill's visit to Pyongyang 
late June. 
 
On the lifting of the freeze on North Korean funds, Hill fully 
accepted the North's request for a full return of the funds, but on 
the HEU programs, Hill stressed, "A transparent approach is 
necessary." Should he accept halfway measures, he would be simply 
exposed to criticism in the US, and the result could affect talks 
with Iran on its nuclear issue. 
 
North Korea, which successfully extracted concessions from the US, 
appears to be growing more confident that multilateral talks will go 
in its favor. When Kim arrived in Beijing, he told reporters with a 
smile: "Please wait for (the fruit of the session)." North Korea 
apparently wants to follow the same negotiating pattern of first 
holding talks between the US and North Korea and then getting a 
bilateral agreement to be approved at a six-party meeting as it did 
in the US-North Korea talks in Berlin in January. 
 
On the other hand, the North has made clear its stance of isolating 
Japan from other member nations. The pro-Pyongyang General 
Association of Korean Residents in Japan's (Chongryon) newspaper 
Choson Sinbo in its electronic edition dated yesterday reported: 
"Japan-North Korea relations are getting worse and worse. No 
bilateral dialogue are likely to take place for the time being." One 
source connected with the six-party talks also noted that during the 
session of the chief delegates, Kim would bring up the recent 
fraudulent case concerning the sale of Chongryon's property and 
criticize the Japanese government's response. 
 
18) WTO agricultural talks: New chairman's proposal harsh to Japan, 
 
TOKYO 00003276  011 OF 012 
 
 
limiting number of high tariff items to 4 % or 6 % of total trade 
items 
 
YOMIURI (Page 9) (Excerpts) 
July 18, 2007 
 
Geneva, Kaku Watanabe 
 
Agricultural Committee Chairman Crawford Falconer during a meeting 
of the multilateral trade talks at the World Trade Organization 
(WTO) yesterday presented a new chairman's proposal aimed at 
settling agricultural talks, the primary concern, by the end of the 
year. The package contains severe specifics for Japan, including 
limiting the number of key trade items eligible for exceptionally 
high tariffs, which Japan wants to apply to rice and some other 
items, to up to 4 % or 6 % of all trade items. 
 
Meeting the press after presenting the package of proposals, 
Falconer clarified his stance of urging member nations to make 
concessions, noting, "A final agreement will be very close to the 
package, or the talks will end without an agreement." 
 
The chairman's proposal noted that key items should be up to 4 % or 
6 % of all trade items. This is close to 1 %, the number the US 
wants to see, but far below the 10 % or 15 % called for by net 
importers of agricultural products, such as Japan. 
 
Provided that this proposal is adopted, Japan's key items will be no 
more than about 40 or 60. The number of items which Japan regards as 
important tops 200 -- 17 for rice, 20 for flour, 47 for dairy 
products, and 56 for sugar. The outlook is that a majority of these 
products will not be treated as exceptions under the proposal. 
 
The package did not directly mention the introduction of a ceiling 
on tariffs to lower tariffs on agricultural products to a set level, 
a proposal which Japan and other countries are strongly opposing. 
 
19) Moving away from beef? US beef back on store shelves, but 
wholesale prices remain sluggish; Drop in distribution of short 
plate during import suspension to blame? 
 
TOKYO SHIMBUN (Page 8) (Slightly abridged) 
July 18, 2007/07/18 
 
Wholesale prices of beef, which had been hovering at high levels, 
are beginning to drop due. The reason is that the beef supply has 
sharply increased since June, following a partial revision of import 
conditions imposed on US beef and sluggish consumption due to 
unseasonably cool weather. Some have pointed out that the suspension 
of US beef imports has put a dent on supply of the boneless short 
plate preferred by Japanese, giving rise to a trend of consumers 
moving away from beef. 
 
Imports of US beef had been banned since 2003, following the 
discovery of a BSE-infected cow. US beef imports resumed last 
summer. However, imports have been limited with such import 
conditions as opening all boxes for inspection and limiting beef 
eligible for export to cattle aged 20 months or younger. In 
addition, wholesale beef prices had been hovering at high levels due 
to the growing cost of feed caused by soaring corn prices. 
 
However, US beef imports in June, based on preliminary figures 
 
TOKYO 00003276  012 OF 012 
 
 
issued by the animal quarantine station, sharply increased to 
approximately 4,300 tons, about 1.5 times higher than the amount 
imported in May, following the June introduction of sampling 
inspection instead of the practice of opening all boxes. The average 
price of beef carcass at the Tokyo Central Wholesale Market marked 
1,069 yen per kg, down about 15 % from the February level and about 
10 % from the previous year. 
 
With the launching of Japan-US talks to review the cattle age 
condition, there has appeared a possibility of import conditions 
being eased possibly early next year. The outlook for an increased 
supply appears to have affected market prices. US Meat Export 
Federation Chairman Philip Seng expressed hope: "Japan's imports of 
US beef will reach 40,000 tons this year and return to the pre-ban 
level in a few years' time." 
 
Retail prices at supermarkets are showing signs of dropping. 
However, consumer demand for beef is sluggish. The peak period for 
beef demand is mid-summer, but pessimistic voices are being heard 
among retailers, with one executive of a food manufacturer noting, 
"Beef sales this year will be no better than previous years." 
 
SCHIEFFER