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UNCLAS SECTION 01 OF 12 TOKYO 003318 
 
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 07/20/07 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule 
 
4) Ambassador to US Kato warns that House passage of comfort-women 
resolution could "damage" US-Japan relations 
 
North Korea problem: 
5) Japan, North Korea meet for the first time bilaterally in four 
months at the six-party talks 
6) Japan, DPRK agree in meeting to make efforts to resolve pending 
issues 
7) Government gets mixed feelings from bilateral meeting with DPRK 
delegate at six-party meeting 
 
8) Another gaffe by Foreign Minister Aso: Even someone with 
Alzheimer's disease can tell the difference between high and low 
farm prices 
 
Opinion polls: 
9) DPJ (Minshuto) continues to command the lead as choice of voters 
in upcoming election, but Cabinet support rate rises to 34.8% in 
Yomiuri poll 
10) Internet monitor poll by Tokyo Shimbun finds 80% of public have 
doubts about prime minister's policy stance on taxes, pensions 
11) Asahi survey predicts that ruling coalition will lose majority 
in the upcoming election, making DPJ the number party in the Upper 
House 
 
12) Prime Minister Abe stays clear of issue of use of collective 
self-defense in election campaign, while coalition partner Komeito 
comes out against it 
 
Earthquake troubles: 
13) More troubles revealed for quake-hit nuclear power plant: 
Blowers left on afterward releasing radioactive particles outside 
plant 
14) Air conditioners donated by US to quake victims cannot be used 
due to different electrical-power standard 
 
15) Agricultural Minister Akagi describes chair's proposals for WTO 
farm negotiations as having "very severe contents" for Japan 
 
16) Prime Minister's Official Residence (Kantei) will be the control 
tower for global-warming countermeasures 
 
17) Japan Fair Trade Commission ready to crack down under 
anti-monopoly law on possible international air fare cartel by 
American and European carriers 
 
18) Japanese traders to use Siberian Railroad for cargo shipping, 
saving much time 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
LDP, New Komeito could fall into minority in Upper House; LDP 
lagging in single-seat districts; DPJ looking to become number-one 
 
TOKYO 00003318  002 OF 012 
 
 
party 
 
Mainichi: 
10 electric power companies found to have no manuals to deal with 
possible fire caused by earthquake 
 
Yomiuri: 
Chuetsu earthquake: Sloppy management at nuclear power plant, 
including loss of quake data, unattended leak of radioactive 
material 
 
Nikkei: 
Cargo service via Trans-Siberian Railway: Mitsui & Co. to team up 
with Russian Railways: 40% cut in travel time possible; Boon for 
Japanese companies looking to move into Russia 
 
Sankei: 
Murakami gets two-year prison term 
 
Tokyo Shimbun: 
Leak of radioactive material continued at Kashiwazaki nuclear power 
plant even after detection -- ventilator left running 
 
Akahata: 
Chuetsu earthquake recorded intensity exceeding the level 
anticipated when designing seven reactors at Kashiwazaki nuclear 
power plant; Massive data lost 
 
2) EDITORIALS 
 
Asahi: 
(1) Murakami found guilty 
(2) Chuetsu earthquake: Support elderly people 
 
Mainichi: 
(1) Murakami gets prison term: Root out irregularities through 
strengthened monitoring 
(2) Upper House election: Disparities among workers -- compete over 
measures to improve working conditions of part-timers 
 
Yomiuri: 
(1) Constitution: Why are all political parties refraining from 
discussing future of state? 
(2) Murakami Fund: Profit-first principle condemned 
 
Nikkei: 
(1) Mask stripped away from Murakami 
(2) Further reform of yuan necessary 
 
Sankei: 
(1) Murakami gets prison term: First step toward creating market 
that does not allow unrestrained business activities 
(2) Foreign policy and security in upcoming Upper House election: To 
which party can we delegate national interests and security? 
 
Tokyo Shimbun: 
(1) Murakami handed prison term: Profit-first principle condemned 
(2) Eel regulation: Protect food culture through disciplined 
consumption 
 
Akahata: 
(1) Shady ties between politics and money: Cast ballots to shed 
 
TOKYO 00003318  003 OF 012 
 
 
light on corrupt money politics 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, July 19 
 
NIKKEI (Page 2) (Full) 
July 20, 2007 
 
07:53 
Left the Hotel New Matsumi in Beppu, Oita. 
 
08:06 
Left JR Beppu Station by a special express. 
 
11:38 
Arrived at JR Miyazaki Station. Met Miyazaki Governor 
Higashikokubaru in the station building. 
 
11:51 
Delivered a campaign speech in front of a department store in 
Miyazaki. 
 
12:29 
Had lunch at a restaurant with Upper House member Masaaki Yamazaki 
and others. 
 
13:43 
Gave a speech at a park in Miyakonojo City. 
 
14:33 
Arrived at Sueyoshi in Soo City, Kagoshima, accompanied by Lower 
House member Hiroshi Moriyama. 
 
15:36 
Met Kagoshima Governor Ito at JR Kagoshima Chuo Station 
 
17:08 
Met family members of Shuichi Ichikawa, an abductee by North Korea, 
and others at the Kirishima City Hall. Attended a speech meeting 
sponsored by the LDP Kagoshima Prefectural Chapter. 
 
19:22 
Met Lower House member Yasuhiro Ozato at Kagoshima Airport. 
 
19:55 
Left Kagoshima Airport by JAL1878. 
 
21:13 
Arrived at Haneda Airport. 
 
21;45 
Returned to his official residence. 
 
4) Ambassador to US Kato warns US House against "comfort women" 
resolution: "It will have a harmful effect on Japan-US relations" 
 
SANKEI (Page 7) (Full) 
July 20, 2007 
 
Yoshihisa Komori, Washington 
 
 
TOKYO 00003318  004 OF 012 
 
 
US media reported on July 18 that Japanese Ambassador to the United 
States Kato has sent a letter to leaders of the House of 
Representatives noting that harmful, long-term damage to Japan-US 
relations is likely if the US House of Representatives passes a 
resolution denouncing Japan over the issue of "comfort women" during 
World War II. Reportedly, the House is expected to take a vote on 
the resolution after Japan's Upper House election. 
 
The Washington Post in its July 18 edition carried an article 
headlined "Japan warns US House against resolution on WWII sex 
slaves," in which it said that Japanese Ambassador to the US Ryozo 
Kato again appealed to House Speaker Pelosi and some House leaders 
not to pass the resolution and that the ambassador warned that 
passage of the resolution "will almost certainly have lasting and 
harmful effects on the deep friendship, close trust and wide-ranging 
cooperation our two nations now enjoy." 
 
The Post reported that it had obtained a copy of the letter dated 
June 22, noting that Japan may reconsider its role as a supporter of 
US policy in Iraq if the resolution is adopted in the House, as 
Ambassador Kato in the letter cited, as "specific examples of 
Japan's support for the US," its cooperation for stabilizing and 
rebuilding Iraq. 
 
Reuters also reported a similar story on July 18, saying it obtained 
a copy of the ambassador's letter. The Japanese Embassy in the US 
confirmed that a letter had been sent by the ambassador to leaders 
of the House of Representatives, but declined to comment on that. 
 
5) Japan, DPRK hold talks after four months' silence; "Will work 
together to resolve pending issues" 
 
NIKKEI (Page 1) (Full) 
July 20, 2007 
 
Manabu Shimada, Beijing 
 
Japan's envoy to the six-party talks, Kenichiro Sasae, 
director-general of the Foreign Ministry's Asian and Oceanian 
Affairs Bureau, yesterday had a one-hour meeting with his North 
Korean counterpart, Vice Foreign Minister Kim Kye Gwan. According to 
an account by the Japanese side, both officials agreed to endeavor 
to resolve the outstanding issues between the two countries, 
including the abductions of Japanese citizens by North Korea. 
 
Reportedly, the Japanese side asked for a positive response from the 
North Koreans to the abduction issue, as well as an early resumption 
of the Japan-North Korea working group. The North Korean side 
reportedly said, "We will relay this to our home government." 
Full-scale talks between the two countries took place after a hiatus 
of four months since the meeting of the working group on diplomatic 
normalization between the two countries. 
 
6) Japan, DPRK to "endeavor" to resolve outstanding issues 
 
SANKEI (Page 7) (Full) 
July 20, 2007 
 
Mashiho Akachi, Beijing 
 
Kenichiro Sasae, director-general of Japan's Foreign Ministry's 
Asian and Oceanian Affairs Bureau, yesterday had a one-hour meeting 
 
TOKYO 00003318  005 OF 012 
 
 
with North Korean Vice Foreign Minister Kim Kye Gwan, the North's 
chief negotiator in the six-party talks, at the Diaoyutai Guest 
House of China in Beijing. According to Sasae, the two officials 
agreed to make efforts to resolve outstanding issues, including the 
abductions of Japanese citizens by North Korea. But later in the 
day, North Korea's Foreign Ministry released a long statement 
denouncing Japan for its calling for the resolution of the abduction 
issue, making again clear that there is no change in its stance that 
this issue has already been settled. 
 
The bilateral dialogue between the chief negotiators of Japan and 
North Korea took place after a hiatus of four months since the 
Japan-North Korea working group talks held in Hanoi in March. The 
dialogue yesterday was realized at the request by the Japanese 
side. 
 
In the session, Sasae reportedly asked for an early resumption of 
the Japan-North Korea working group to discuss diplomatic 
normalization between the two countries and indicated an intention 
to take part in the aid programs for North Korea, such as provision 
of 950,000 tons of heavy fuel oil as energy aid, which is planned to 
be extended as part of the "next-phase" action, if the abduction 
issue makes progress leading to its resolution. 
 
Sasae also gave an account of the Japanese government's position 
about the public sale of the property of the pro-Pyongyang General 
Association of Korean Residents in Japan's (Chongryon) 
headquarters. 
 
After the meeting, Sasae told reporters at a hotel: "Both of us 
agreed to make efforts to resolve the issues, though there are 
questions about the six-party talks and Japan-North Korea relations, 
respectively. We had a discussion (premised on the resumption of the 
working group talks)." 
 
The Korean Central News Agency (KCNA), however, denounced the Abe 
administration's stance and strongly warned that "Should Japan's 
desire be accepted, the issue of denuclearizing the Korean Peninsula 
cannot be indefinitely resolved." KCNA concluded that the Abe 
administration was misusing the abduction issue to portray North 
Korea as a threat, and at home, stepping up economic sanctions and 
clampdown on Chongryon, and swinging to the right. 
 
7) Government has mixed feelings about meeting held between Japan, 
North Korea, paying attention to future moves on abduction issue 
 
NIHON KEIZAI (Page 2) (Full) 
July 20, 2007 
 
Manabu Shimada, Beijing 
 
Japan's and North Korea's chief delegates to the six-party talks 
held a meeting on July 19. A Foreign Ministry official commented on 
this meeting: "North Korea's agreement to hold separate talks with 
Japan is a step forward. We need to carefully watch what move it 
will make next." The Japanese government, keeping the North's 
intensifying media criticism of Japan in mind, intends to try to 
ascertain the North's true motives. 
 
The bilateral meeting was held at the request of Japan. According to 
a government source, "We were surprised because we had not 
anticipated the North would accept our offer. It was good for both 
 
TOKYO 00003318  006 OF 012 
 
 
sides to sit down at the table." But many government officials took 
the view that: "Pyongyang probably thought Japan's influence would 
be indispensable if energy aid is to be provided to it. It is 
premature to take it as a positive message about progress on the 
abduction issue." 
 
According to a report by the Korean Central News Agency (KCNA), the 
North Korean Foreign Ministry released the memorandum record (on the 
bilateral meeting) and said critically: "Japan is struggling to hold 
even the six-party talks as hostage to the abduction issue." 
 
Japan's strategy is to resume talks by the working group on 
normalization of diplomatic ties between Japan and North Korea at an 
early date and move the abduction issue forward. Japan is also 
aiming to have a decision to resume the bilateral working group in a 
chairman statement, but the North has not agreed to it. The focus is 
on whether a meeting of the Japan-North Korea working group will be 
held prior to the foreign ministerial of the six-party talks planned 
for September in accordance with Japan's scenario. 
 
Regarding the six-party talks, many officials are worried that Japan 
might find itself isolated because of its tough stance toward the 
North or that other participants might become less interested in the 
abduction issue. Japan's basic policy is not to make any easy 
concession, but it is also hopeful of drawing North Korea to the 
discussion table. 
 
8) "Even Alzheimer's patients can understand," Aso says 
 
MAINICHI (Page 2) (Full) 
July 20, 2007 
 
Referring in his speech yesterday in the city of Takaoka, Toyama 
Prefecture to the differences of the prices of domestic and foreign 
agricultural products, Foreign Minister Taro Aso stated: "Even 
Alzheimer's patients know which one is expensive, 78,000 yen 
or16,000 yen." 
 
In a rally for the ruling Liberal Democratic party (LDP) incumbent, 
who is seeking to hold his seat in the Toyama constituency (one seat 
up for reelection) in the July 29 House of Councillors election, Aso 
tried to explain how expensive Japanese agricultural products are 
overseas, mentioning the fact that a sack of Japanese rice worth 
16,000 yen is sold for 78,000 yen in China. He then cited the word 
"Alzheimer's" disease. 
 
There were elderly supporters at the rally. Aso touched on the 
pension record-keeping fiasco, stating: "This issue is a matter for 
30 years from now. I understand that those who pay premiums are 
concerned about it, but you don't have to worry about it." 
 
9) Poll: Minshuto maintains lead; Cabinet support rate rebounds to 
34.8% 
 
YOMIURI (Page 1) (Full) 
July 20, 2007 
 
The Yomiuri Shimbun conducted its fifth telephone-based nationwide 
poll on July 17-19. About 28% of those polled said they would vote 
for Minshuto (Democratic Party of Japan) in the 
proportional-representation segment of the July 29 House of 
Councillors election, while 20% said they would vote for the ruling 
 
TOKYO 00003318  007 OF 012 
 
 
Liberal Democratic Party, widening the gap by one point over the 
previous poll (conducted on July 10-12). Meanwhile, 28% of 
respondents said they would vote for the main opposition party 
Minshuto in the prefectural constituencies, an increase of one 
percentage point from the July 10-12 poll, while 24 %intend to vote 
for the LDP, up two points from the previous survey. The results of 
the latest survey show that Minshuto still leads the LDP both in the 
proportional-representation segment and the prefectural constituency 
races. 
 
The survey on voters' attitudes toward the prefectural electoral 
districts indicated that the LDP had regained some support in towns 
and villages, with 29% of the surveyed saying they would vote for 
the party and 28% saying they would vote for the largest opposition 
party. Meanwhile 35% of voters in large cities said they would vote 
for Minshuto and 21%  favored the LDP. 
 
The approval rating for the cabinet of Prime Minister Shinzo Abe 
rebounded to 34.8%  , up 4.6  percentage points from the previous 
poll. In the consecutive Yomiuri polls, the highest disapproval 
rating for the Abe cabinet was 52.6%  . Asked about the government's 
measures for the pension record-keeping blunders by the Social 
Insurance Agency, 36% of the pollees said they valued them, up five 
points from the previous poll, 55% answered otherwise, a decrease of 
five points. 
 
Asked whether Minshuto had come up with effective measures for the 
pension fiasco, 61% of the respondents said they did not think so, 
while 18% answered yes. 
 
10) Poll: 80% have doubts about Abe's elusive attitude toward 
consumption tax hike 
 
TOKYO SHIMBUN (Page 2) (Abridged slightly) 
July 20, 2007 
 
The Tokyo Shimbun yesterday compiled the results of its 
Internet-based opinion survey that was conducted to find out the 
political awareness of 500 monitors. The results exposed their 
strong sense of resistance to the question of raising the 
consumption tax rate -- a focus in the upcoming Upper House election 
-- discontent with Prime Minister Shinzo Abe's elusive attitude 
toward the question. 
 
To a question asking whether the consumption tax rate should he 
hiked for financing the pension program, over 70% of respondents 
answered it should not be hiked for the time being or must 
absolutely not be raised, greatly surpassing positive answers. 
Although the government and the ruling coalition mainly believe the 
consumption tax must be raised eventually in order to secure a 
stable financial resource, obtaining support from voters seems 
difficult. 
 
Asked about Prime Minister Abe's noncommittal attitude toward a 
consumption tax hike and the Democratic Party of Japan's plan to 
fund the basic portion of the pension program without raising the 
tax, 41.4 %answered that they could understand the DPJ's plan but 
the prime minister's attitude was questionable, while 40.1% said 
both were questionable. At the same time, 11.2 %said the prime 
minister's position was understandable but the DPJ's plan was 
questionable and 7.4 %answered both were understandable. 
 
 
TOKYO 00003318  008 OF 012 
 
 
This means that over 80% of respondents have doubts about the prime 
minister's stance. With the tax system scheduled to be discussed in 
the fall or later, the prime minister's approach of not making the 
consumption tax a campaign issue seems to appear cunning in the eyes 
of voters. 
 
To a question asking for how the prime minister should take 
responsibility in the event the ruling coalition was defeated in the 
Upper House election, 37.3 %said he should dissolve the Lower House 
for a snap general election, while 35.1% indicated he should resign 
if the ruling bloc failed to win a majority. In addition, 12.8% said 
he should not resign regardless of the results of the election. 
Although there is a view in the LDP that the outcome of the election 
must not be linked to the prime minister's fate, voters are 
apparently expecting a proper consequence. 
 
As for the question of Agriculture Minister Akagi's shady office 
expenses, an overwhelming 82.3 %said he must disclose receipts. 
 
Those who said they would "support" or "more or less support" the 
Abe cabinet accounted for 22 % , while nonsupport totaled 77.4 % . 
Of the 94 respondents who had expressed support for the cabinet in 
the previous survey, 22, or 23.4 % , said they no longer support 
it. 
 
11) Situational survey at the opening stage of the Upper House 
election: Possibility of LDP, Komeito coalition losing majority; LDP 
stagnant in the single districts; DPJ moving to become no. 1 party 
in the Upper House 
 
ASAHI (Top play) (Excerpt) 
July 20, 2007 
 
The Asahi Shimbun on July 17 and 18 carried out a situational survey 
by telephone targeting eligible voters nationwide on the House of 
Councilors election that will take place July 29. Adding information 
from nationwide news gathering to probe the situation at the opening 
stage of the election, the conclusions reached included: 1) The 
Liberal Democratic Party (LDP) is stagnant, and there is a 
possibility it could obtain less than the 44 seats it obtained in 
1998, when it lost the election; 2) It is a delicate question 
whether the New Komeito can secure 12 seats in the election; 3) 
Minshuto (Democratic Party of Japan or DPJ) is doing well and has 
the momentum for exceeding 50 seats, the largest number it has 
attained (in an Upper House election) so far; and 4) the Japanese 
Communist Party and Social Democratic Party will have trouble 
picking up seats. In order for the ruling parties to maintain their 
coalition, they need to win a total of 64 seats in this election (of 
half the upper house), but that seems fairly difficult to achieve, 
even adding those independents who have LDP backing. However, about 
50% of the voters have yet to clarify their choices in the district 
races and about 30% are still undecided in the proportional 
representation segment of the election, so the situation is still 
fluid. This newspaper will carry out another similar survey next 
week at the final stage of the campaign. 
 
12) Abe shies away from collective defense in election campaign out 
of consideration for New Komeito 
 
ASAHI (Page 1) (Abridged slightly) 
July 20, 2007 
 
 
TOKYO 00003318  009 OF 012 
 
 
In the ongoing election campaign, Prime Minister Shinzo Abe has 
rarely touched on the question of allowing the country to exercise 
the right to collective self-defense, although he is eager to change 
the government's interpretation of the Constitution to open the door 
for it. That is mainly because New Komeito, the Liberal Democratic 
Party's coalition partner, remains cautious about the matter. A 
blue-ribbon panel launched by Abe is expected to produce a report 
this fall embracing the idea of exercising the right. But the hurdle 
might rise higher depending on how the election turns out and the 
response of the New Komeito. 
 
In May, Abe presented to the blue-ribbon panel four scenarios, such 
as whether the SDF can intercept a US-bound missile, to find out the 
extent to which Japan can deal with those situations under the 
current interpretation of the Constitution. 
 
Most panel members are in favor of exercising the right to 
collective defense. The panel's dominant view is that the 
government's interpretation of the Constitution has reached its 
limit. The panel's chair Shunji Yanai, a former ambassador to the 
United States, also pointed in a July 10 Asahi Shimbun interview to 
the likelihood of reaching a conclusion endorsing Japan's right to 
collective defense. 
 
Abe also indicated before assuming office that the government's 
position banning exercising the right was unacceptable in the 
international community. 
 
But in the ongoing campaign, Abe has not touched on collective 
defense in roadside speeches. Asked about the issue in a July 11 
party-head debate ahead of the opening of election campaigning, Abe 
simply said: "Discussion is underway (by the blue-ribbon panel)." 
 
Abe's elusiveness comes from the New Komeito's strong opposition to 
allowing the country to exercise the right. Although the LDP vows in 
its manifesto to sort out the relationship with the Constitution, 
including the question of the right to collective defense, the 
ruling coalition's manifesto does not mention collective defense. 
 
New Komeito leader Ota on a television program on July 17 said: "The 
prime minister and I talk quite often, and he has assured me that he 
will stand by the government's traditional interpretation of the 
Constitution." It will not be easy for the government to change its 
constitutional interpretation even if the Abe administration manages 
to get through the upcoming election and the panel reaches a 
conclusion supportive of collective defense. 
 
13) With exhaust fan left on, iodine found emitted even after 
discovery of problem at nuclear plant, probably due to errors in 
operation procedure 
 
NIKKEI (Page 1) (Excerpts) 
July 20, 2007 
 
Tokyo Electric Power Co. announced yesterday that after radioactive 
substances were detected from the No. 7 reactor of the 
Kashiwazaki-Kariwa nuclear power plant in Niigata Prefecture 
following the Niigata Prefecture Chuetsu Offshore Earthquake on July 
16, iodine had continued to leak out of the plant for a few days. It 
is believed that radioactive iodine was emitted from an exhaust fan 
that continued to run due to errors in the operation procedures, 
even though the reactors were automatically shut down after the 
 
TOKYO 00003318  010 OF 012 
 
 
quake. 
 
14) US air conditioners unable to be used because of different 
voltage standards; Adjustment of voltage standards and plug 
remodeling necessary 
 
MAINICHI (Page 26) (Full) 
July 20, 2007 
 
The 96 air conditioners delivered by the US military for use in the 
evacuation centers for those affected by the Niigata Chuetsu 
earthquake are sitting in a corner, unable to be used because they 
are set to US voltage standards.On top of adjusting the voltage 
standards, the plugs must also be remodeled, and as a result, it is 
uncertain when the air conditioners can be put to use. 
 
The air conditioners are a portable model made by Sears Roebuck.They 
were delivered to Niigata Airport on the 18th and 19th and 
immediately brought to Kashiwazaki City.Ambassador to Japan 
Schieffer personally delivered to the airport the 48 air 
conditioners brought on the 18th.However according to the Niigata 
branch of Tohoku Electric Power Co., while most homes have electric 
currents of 100-volts and bigger facilities such as schools have at 
the most 200-volts, the air conditioners are made for electric 
currents of 230-volts. 
 
Currently, members of the Self-Defense Forces, who came to the area 
to assist with relief efforts, are working to adjust the air 
conditioners under the guidance of US technicians so they can be 
used at quake-stricken areas throughout the city.Yet someone 
involved with the situation said, "We want to fix up and use quickly 
the (air conditioners) that (the US) took the trouble to send, but 
we wish that (the US) had sent them to us in a condition that was 
easier to deal with." 
 
15) WTO agricultural committee chairman's new proposal "severe" for 
Japan, Agricultural Minister Akagi says 
 
YOMIURI (Page 9) (Full) 
July 20, 2007 
 
World Trade Organization (WTO) Agricultural Committee Chairman 
Crawford Falconer on July 17 presented a new set of proposals to WTO 
members. Regarding a cut back on the number of key items eligible 
for exceptionally high tariffs, Agricultural Minister Akagi said, 
"The package includes very severe proposals." 
 
Japan had maintained that 10%  -15% of all agricultural trade items 
(133-200 items) should be allowed as key items. However, the 
chairman's proposal proposed 4 %or 6% (40 or 60 items) of taxable 
items. Akagi indicated his intention to seek a revision in future 
talks, noting, "The scope of proposed items is very narrow. It is a 
problem." 
 
16) Government to set up at Kantei control tower in charge of global 
warning countermeasures 
 
YOMIURI (Page 2) (Full) 
July 20, 2007 
 
In order to respond to the problem of global warming, which will 
become a major topic of discussion in the 2008 Group of Eight Summit 
 
TOKYO 00003318  011 OF 012 
 
 
to take place in the Lake Toya area in Hokkaido, the government 
decided yesterday to set up in early August or so a "control tower" 
in the Kantei (Prime Minister's Official Residence) in charge of 
coming up with measures to cope with climate change. Several 
ministries concerned have compiled measures so far. 
 
Specifically, the members of the new body will be picked from among 
the private sector experts, bureaucrats, special advisors to the 
cabinet, and special advisors to the prime minister, offering 
suggestions and recommendations to the prime minister. The control 
tower will likely fulfill the function of secretariat of a 
four-minister conference (foreign minister, chief cabinet secretary, 
environment minister, and minister of economy, trade and industry), 
and be permanently stationed in the Kantei. 
 
As the European Union and the United States have stepped up their 
efforts for dealing with global warming, concern has spread in the 
government, with a government source saying, "Japan is falling 
behind other countries in the area of creating a system." 
 
The government, therefore, decided to set up the new post 
responsible for proactive policy-making in the light of the Council 
on Environment Quality of the United States. 
 
17) FTC mulls application of Antimonopoly Law for international 
airfare cartels, focusing on moves in US, Europe 
 
NIKKEI (Page 5) (Full) 
July 20, 2007 
 
The study group on government regulations and competitive policy 
under the Fair Trade Commission (FTC) released a report yesterday on 
whether to apply the Antimonopoly Law to international airfare 
cartels designed to fix prices through negotiations among airlines. 
Currently, international airfare cartels are exceptionally placed 
outside the reach of the law. The report points out that the current 
scope of subjects to the exceptional regulation is not necessarily 
at "the minimum necessary level." It also refers to the decisions of 
the European Union (EU) and the United States to scrap their 
special-exemption measures for international airfares, indicating 
the need for Japan to review its regulation. 
 
If the study group defines it proper to remove the exception for 
international airfares in its final report due out in the fall or 
later, the FTC will ask the Ministry of Land, Infrastructure and 
Transport to revise the Aviation Law under its jurisdiction. 
 
The international airfare cartel is a system for prices for each 
route to be set by the International Air Transportation Association 
(IATA) joined by worldwide airlines or by bilateral treaties. In 
Japan, the Antimonopoly Law is not applied to the cartel system 
under the Aviation Law. 
 
The EU decided in late 2006 to regard the said cartel as illegal. 
The US authorities are also looking into scrapping the special 
regulation. 
 
When a review of the exceptional regulation for international 
airfares was discussed in 1999 in Japan, it was decided to keep the 
cartel system in place, on the grounds that "Japan's system should 
be in line with the international one." The study group now finds no 
reason for continuing the current system. 
 
TOKYO 00003318  012 OF 012 
 
 
 
Since many domestic airlines have already offered discount services, 
prices set by IATA have hardly been adopted in the domestic aviation 
industry. Given this, many anticipate that even if the Antimonopoly 
Law begins to apply, there will be no major impact. 
 
Each airline company, however, has set discount rates based on 
IATA-fixed prices, so some voice concern that "the abolishment of 
the cartel system might cause a price collapse." 
 
18) Cargo service via Trans-Siberian Railway: Mitsui & Co. to team 
up with Russian Railways: 40% cut in travel time possible; Boost to 
Japanese companies' advance into Russia 
 
NIHON KEIZAI (Top Play) (Lead para.) 
July 20, 2007 
 
Mitsui & Co. plans to team up with state-run Russian Railways to 
launch cargo service for Japanese companies using the Trans-Siberian 
Railway connecting the Far East and western Russia. Mitsui will 
serve as Russian Railways' Japanese agent responsible for goods 
distribution operations. The business tie-up will enable a reduction 
in travel time from the Far East to western Russia to about 25 days, 
which is about 40% quicker than using ship freight, currently main 
means of transporting cargoes to western Russia. Mitsui hopes to 
lead the tie-up deal to efficient distribution, which has been a 
theme for the Japan-Russia business. Since Toyota Motors, which is 
now constructing a plant in Russia, is also looking into the 
possibility of using the Trans-Siberian Railway, the railway will 
likely support Japanese companies' advance into Russia as a main 
means of connecting Japan to Russia and East Europe. 
 
SCHIEFFER