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UNCLAS SECTION 01 OF 10 TOKYO 004052 
 
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--August 30, 2007 
 
¶1. (U) This cable contains the Japan Economic Scope from August 
30, 2007. 
 
2.(SBU) Table of Contents 
 
Political Moves 
¶3.  Abe Reshuffles Cabinet 
¶4.  New Appointees and Postal Privatization 
¶5.  ACCJ T&L Committee Meets with CPRR on Aviation Policy 
Money Matters 
¶6.  Minimum Wage Non-Compliance 6.4 Percent 
¶7.  MHLW Survey: Japan's Income Disparities Widened to Record 
Level 
¶8.  FDI:  American Investment Firm to Finance Construction of 
Hokkaido's Largest Distribution Center 
¶9.  Japan's First PFI Port Project under SZSR a Failure in 
Kitakyushu 
Agriculture and Trade 
¶10. Japan's New WTO Tandem from Same Faction 
¶11. Stay the Course on Agriculture Reform? 
¶12. Another Food Safety Scandal Rocks Hokkaido 
¶13. Japan-EU FTA on Horizon? 
¶14. Beef on Back Burner 
Cars 
¶15. Nissan Kyushu Expects to Return to 400,000-Car Production in 
JFY2007 
¶16. Japan's First Privatized H-IIA Launch Vehicle Set for Launch 
¶17. NTSB Chairman Visits Tokyo 
Security Updates 
¶18. U.S.-Japan Bilateral Talks on Cyber-Security 
¶19. Japan Customs Focuses on Illicit Guns and Drugs 
¶20. Japanese Immigrations to Implement Fingerprint Scanning on 
Nov. 20 
¶21. Japan Works on Pilot Program for Radiological Screening at 
Yokohama 
Japan's Foreign Relations 
¶22. Update on Western Japan-Korea Ties 
¶23. Japan - India Model Coal Plant Progressing 
Sports 
24.Tokyo Heat Strains Electricity Grid but Nothing More Important 
than High School Baseball 
 
--------------- 
POLITICAL MOVES 
--------------- 
 
¶3.  (SBU) Abe Reshuffles Cabinet 
--------------------------------------------- --------- 
 
Prime Minister Abe reshuffled his cabinet August 27, bringing in 
veteran lawmakers and party heavyweights.  The reshuffle 
immediately improved Abe's support rate, though that rate 
continues to trail in the non-support rate in most polls. 
 Business leaders and commentators have praised the new cabinet's 
stability and expertise while lamenting that it promises few new 
directions or bold policy proposals. 
 
Key appointees include Chief Cabinet Secretary Kaoru Yosano, 
Foreign Minister Nobutaka Machimura, Finance Minister Fukushiro 
Nukaga, Minister of Health, Labor, and Welfare Yoichi Masuzoe, 
Agriculture Minister Takehiko Endo, and Minister of Internal 
Affairs and Communications Hiroya Masuda.  Minister of Economy, 
Trade, and Industry Amari, Transportation Minister Fuyushiba, and 
Economic and Fiscal Policy Minister Ota retained their portfolios. 
 
Further reporting can be found in Tokyo 3968 (overall assessment), 
3970 (biographies), 4013 (business reaction), and 4044 (polling 
bounce).  (ECON: Marc Dillard) 
 
¶4.  (SBU) New Appointees and Postal Privatization 
--------------------------------------------- --------- 
 
Subsequent to Prime Minister Abe's August 27 cabinet reshuffle, 
four former "postal rebels," who opposed former Prime Minister 
Koizumi's 2005 postal privatization bills, were appointed as 
senior vice ministers.  Some press reports have speculated that 
the Abe cabinet's reform credibility will be set back by these 
appointments. 
 
Responding in the press, Chief Cabinet Secretary Yosano said 
"(the problems associated with) postal privatization seem to be 
something that happened a long time ago. Postal privatization is 
 
TOKYO 00004052  002 OF 010 
 
 
fully embedded as a prescribed course, and should not affect 
personnel appointments." 
 
We note that former Iwate governor and Postal Services 
Privatization Committee member Hiroya Masuda was appointed 
Minister of Internal Affairs and Communications, where he will 
wield direct influence on the privatization process.  Masuda's 
appointment has been taken as a positive sign in the business 
community, and we will be watching what, if any, conflict arises 
between Masuda and the "postal rebels." 
 
The four "postal rebels" are: Hiroshi Moriyama, Senior Vice- 
Minister (SVM) for Finance; Masahiro Imamura, SVM for Agriculture, 
Forestry and Fisheries; Yoshio Nakagawa, SVM for the Cabinet 
Office; and Hiromi Iwanaga, SVM for Agriculture, Forestry and 
Fisheries.  (ECON:  Ai Kaneko/Marc Dillard) 
 
¶5.  (SBU) ACCJ T&L Committee Meets with CPRR on Aviation Policy 
--------------------------------------------- --------- 
 
The ACCJ's Transportation and Logistics (T&L) Committee testified 
before the Council for the Promotion for Regulatory Reform (CPRR) 
on aviation matters in early August. 
 
U.S. airlines expressed their concerns about Haneda 
internationalization.  They found the committee members to be 
focused on passenger carriers and unaware of the issues 
surrounding cargo carrier operations. 
 
The ACCJ reports it was worrisome that the CPRR remained fixed on 
pursuing a slot auction idea as a way to allocate slots at 
Japanese airports.  That the foreign airlines were allowed to 
testify was a small victory for transparency as they were not 
given the opportunity to do so in front of several Kantei and 
MLIT aviation policy panels examining aviation reform this spring. 
 
The ACCJ plans to continue its efforts to educate the academic 
and private sector specialists on the CPRR and that populate 
other government policy committees.  (ECON:  Josh Handler) 
 
------------- 
MONEY MATTERS 
------------- 
 
¶6.  (SBU) Minimum Wage Non-Compliance 6.4 Percent 
--------------------------------------------- --------- 
 
Over six percent of businesses nationwide violate minimum wage 
laws, according to an investigation conducted by the Ministry of 
Health, Labor and Welfare (MHLW), the results of which were 
released on August 22. 
 
Violations were particularly high in the following industries: 
clothes and fabric goods, manufacturing, dry cleaners, food 
manufacturing, restaurants, barbers and hairdressers, and taxis. 
 
Officials at MHLW's Labor Standards Bureau told us the number of 
investigations done this year has already doubled that of last 
year, and that the non-compliance rate has declined slightly 
(from 6.8 percent).  MHLW officials told us they are determined 
to strengthen education efforts along with the investigations. 
The minimum wage remains a sensitive political topic and will 
likely be revisited during the fall Diet session. (ECON:  Ai 
Kaneko/Marc Dillard) 
 
¶7.  (U) MHLW Survey: Japan's Income Disparities Widened to Record 
Level 
--------------------------------------------- --------- 
 
Long-awaited survey results on Japan's household income 
disparities showed that initial, pre-redistribution household 
inequality widened to a record level in 2005, as measured by the 
Gini coefficient, due mainly to the aging population. 
 
The Survey on the Redistribution of Income, conducted every three 
years by the Ministry of Health, Labor and Welfare (MHLW) and 
released on August 24, provides the Gini coefficient for both 
initial income of households, and their "redistributed income" 
which reflects household income levels after taking accounts of 
taxes and social security payments/receipts. 
 
Although the pre-redistribution income inequality is widening, 
 
TOKYO 00004052  003 OF 010 
 
 
after inter-generational transfers and income redistribution the 
Gini coefficient remains unchanged from the 1990s.  (FINATT: 
Shuya Sakurai) 
 
¶8.  (U) FDI:  American Investment Firm to Finance Construction of 
Hokkaido's Largest Distribution Center 
--------------------------------------------- --------- 
 
In early August, Chicago-based LaSalle Investment Management 
(LSIM) announced it will invest five billion yen ($42 million) 
toward the construction of a multi-use distribution center in 
Hokkaido. 
 
Slated to open in 2008 at an industrial park in the Sapporo 
suburb of Ebetsu, the facility will be Hokkaido's largest 
distribution center. With 300 employees, it will have the 
capacity to service local food, pharmaceutical and cosmetic 
companies as well as government offices in need of document 
storage. 
 
The Hokkaido distribution center will be the fifth distribution 
center LSIM has financed in Japan. It also marks the second major 
investment in Hokkaido for LSIM following the American-style 
outlet mall "Rera" near the New Chitose Airport. 
 
Due to cheaper land and lower labor costs, Hokkaido has lagged 
behind the rest of Japan in developing a consolidated logistical 
system for local companies.  However, LSIM sees a business 
opportunity as locally operating companies are forced to decrease 
logistical costs in the peaked-out consumption goods market due 
to the ever-decreasing population.  (Sapporo:  Ian Hillman/Yumi 
Baba) 
 
¶9.  (SBU) Japan's First PFI Port Project under SZSR a Failure in 
Kitakyushu 
--------------------------------------------- --------- 
 
Hibiki Container Terminal (HCT), Kitakyushu City's 100 billion 
yen ($860 million) project under the GOJ's Special Zones for 
Structural Reform (SZSR) initiative looks like it may have turned 
into another expensive public works white elephant. 
 
Kitakyushu City recently announced that it would buy all terminal 
facilities owned by Singapore's PSA International-led consortium 
for four billion yen ($34 million) in October 2007.   The city 
plans to contract PSA to continue the maintenance work at the 
terminal for the remainder of this FY for 500 million yen ($4.3 
million). 
 
Kitakyushu's hub port project was one of the original projects 
that inspired the GOJ's SZSR initiative and was the first 
Japanese port project to use PFI (private finance initiative) 
teamed up with a foreign port operator.  However, the project has 
barely stayed afloat since its April 2005 inception. 
 
While PSA will remain the leading shareholder in the consortium, 
post contacts said that the firm's representatives left 
Kitakyushu over a year ago and speculated that PSA would 
eventually end its involvement with the project.  For detailed 
information on HCT, please see the attached.  (Fukuoka:  Yuko 
Nagatomo/Jim Crow) 
 
--------------------- 
AGRICULTURE AND TRADE 
--------------------- 
 
¶10.  (SBU) Japan's New WTO Tandem from Same Faction 
--------------------------------------------- --------- 
 
Japan's cabinet reshuffle does not figure to shake up its WTO 
team.  Trade Minister Akira Amari remains in place while Japan's 
new Agriculture Minister, Takehiko Endo, is cut from the same 
policy mold as previous Agriculture Ministers. 
 
 Japan's current posture in the Doha Round, most observers agree, 
will likely remain familiar -- official professions of support for 
the round complemented by insistence that a deal on agriculture 
not be too ambitious. 
 
According to press reports, PM Abe had enormous difficulty in 
identifying somebody to move over to the Agriculture Ministry 
(MAFF).  MAFF's two previous ministers were undone by financial 
 
TOKYO 00004052  004 OF 010 
 
 
scandal, with Toshikatsu Matsuoka's tenure ending in suicide in 
late May. 
 
Endo, 68, is a crusty veteran familiar with agriculture affairs, 
including a stint as MAFF's senior vice minister.  He reportedly 
enjoys the support of the LDP agriculture caucus in the Diet. 
A senior official at the Trade Ministry (METI) involved in the 
Doha talks told us he was optimistic that Endo would do well in 
his new job.  Endo comes from the same political faction in the 
LDP as Amari. 
 
Junior to Amari in length of service in the Diet -- eight terms 
versus six -- Endo figures to work well with the Trade Minister. 
Separately, a MAFF official confirmed to us that Endo would not 
be traveling to the APEC Senior Leaders meetings in Australia. 
(ECON:  Nicholas Hill) 
 
¶11.  (SBU) Stay the Course on Agriculture Reform? 
--------------------------------------------- --------- 
 
Will the new Agriculture Minister do an about face on necessary 
reforms in the farm sector after PM Abe and his government 
suffered a drubbing in last month's elections in the rural parts 
of Japan? 
 
The ruling coalition's hold on single-seat constituencies in 
rural areas plunged from 29 to six in the Upper House.  Takehiko 
Endo, the new Agriculture Minister, has been an outspoken voice 
for a long time underscoring the urgency of helping these 
depressed regions. 
 
At his inaugural press conference, however, which began before 
midnight on August 27 and continued into the early morning, Endo 
said in essence that the government must stay the course on 
agriculture reform. 
 
When asked about the opposition Democratic Party of Japan's 
criticism of the government's policy of focusing direct payments 
on bigger farms, Endo said existing policies were consistent with 
the need to restructure the farm sector. 
 
The DPJ's proposals, he said, to give payments to all farmers 
effectively would derail structural reforms, stimulate production, 
go against WTO principles, and disadvantage Japan in the Doha 
talks. 
 
Endo added that such broad subsidies would be an increased burden 
on Japanese taxpayers. There was a serious income divide, he said, 
between rural and urban areas, but revitalizing these areas would 
not only come out of policies to help farmers. 
 
The complete transcript of Endo's press conference (in Japanese) 
appears on MAFF's website.  (ECON:  Nicholas Hill/Ryoko Nakano) 
 
¶12.  (U) Another Food Safety Scandal Rocks Hokkaido 
--------------------------------------------- --------- 
 
In a mid-August news conference, Sapporo-based confectionary 
giant Ishiya Company publicly admitted to several food safety 
violations.  Infractions included intentionally extending 
expiration dates for an additional 1-2 months on its popular 
Shiroi Koibito (White Sweetheart) white chocolate cookies over a 
ten-year period and failing to disclose the recent discovery of 
dangerous bacteria in some of the company's cake and ice cream 
products. 
 
The scandal received nationwide coverage because the Shiroi 
Koibito cookie, with more that 7 billon yen ($60 million) in 
sales annually, was one of the most popular souvenirs for 
tourists visiting Hokkaido. Furthermore, the Ishiya Co. is well 
known as the number one sponsor of the Sapporo-based professional 
soccer team Consadore Sapporo. 
 
Concerned about Hokkaido's reputation, government officials 
scrambled to implement damage control. Public health inspectors 
are scouring Ishiya's manufacturing facilities. They are expected 
to announce several punitive measures against the company by the 
end of the month. 
 
This marks the second food safety scandal for Hokkaido this 
summer following the revelations in June that the Meat Hope Co. 
had deliberately mislabeled meat products. (Sapporo:  Ian 
 
TOKYO 00004052  005 OF 010 
 
 
Hillman/Yumi Baba) 
 
¶13.  (SBU) Japan-EU FTA on Horizon? 
--------------------------------------------- --------- 
 
The Japan-EU Business Dialogue Roundtable will convene next month 
to lay the ground work for a Japan-EU FTA negotiation, according 
to a front page story in the August 29 Asahi Shimbun. 
 
A contact at the European Commission office in Tokyo told us 
August 30 that the European and Japanese business communities 
have driven this process so far and there have been no government 
to government discussions as of yet. 
 
Korea's aggressive FTA strategy has contributed to a renewed 
sense of urgency in Japan's business community to engage the 
Europeans in talks. 
 
As the Scope has reported previously, an FTA with the United 
States is not as important a priority to Japan's business 
community because U.S. tariffs and other barriers are already 
very low. 
 
In contrast, Japanese business leaders became very concerned when 
Korea set its sights on signing a free trade agreement with the 
EU. 
 
Barriers to the European market are formidable and, if Korea 
signs a deal, Japanese business -- in contrast to the perception 
about a U.S.-Korea deal -- would be disadvantaged. 
 
Echoing this sentiment, Trade Minister Amari told reporters this 
week that free trade agreements with the United States and 
European Union were "inevitable" for Japan, and noted that any 
deal that Korea works out with the EU would hurt Japanese exports. 
 
Japan's Agriculture Ministry has viewed with suspicion 
negotiating a bilateral agreement with the European Union. 
 
When asked, however, by reporters this week about the Business 
Dialogue Roundtable study group to be formed, new Agriculture 
Minister Endo said such a deal would have some positive effects 
in some sectors.  He added that he would have to consider the 
merits of any deal in a broader context. 
 
According to the Asahi story, the study group aims to have a 
proposal ready in time for the G-8 Summit in Hokkaido, when the 
EU and Japan can take it up in a bilateral.  (ECON:  Nicholas 
Hill) 
 
¶14.  (SBU) Beef on Back Burner 
--------------------------------------------- --------- 
 
Authorities at the Agriculture and Health Ministries have 
accepted USDA's offer to participate in joint unannounced audits 
of U.S. slaughter houses beginning September 17.  This fulfills 
an earlier commitment by USDA and will have little bearing on 
Japan's current age restrictions on U.S. cattle. 
 
Meanwhile, with new Agriculture Minister Endo arriving on the job 
this week, there has been very little movement on the beef issue. 
 
When cornered on the subject during his inaugural press 
conference on August 27, Endo said he planned to defer to the 
experts on his staff. 
 
Endo is from Yonezawa in Yamagata Prefecture, famous for its 
Japanese-style wagyuu beef.  As Vice Agriculture Minister in 2001, 
Endo took the lead in introducing blanket testing of beef. 
 
Although a scientifically ineffective measure for identifying the 
existence of BSE-causing prions, blanket testing was an 
enormously effective measure politically in deflecting public 
criticism from authorities for their mishandling of Japan's 
domestic BSE problem.  (ECON:  Nicholas Hill) 
 
---- 
CARS 
---- 
 
¶15.  (U) Nissan Kyushu Expects to Return to 400,000-Car 
Production in JFY2007 
 
TOKYO 00004052  006 OF 010 
 
 
--------------------------------------------- --------- 
 
On August 22, Nissan Motor's Kyushu Plant (Fukuoka), the firm's 
largest and most advanced domestic production base, held a "line- 
off" ceremony for its second-generation X-Trail sport utility 
vehicle (SUV) -- the plant's first new model in three years. 
At the press conference, Plant Manager Kenzo Kawase announced 
plans to introduce three other new models in 2007, including the 
"Rogue" SUV geared for the North American market.  Kawase 
projected that as new models come on line, production should rise 
to over 400,000 units in the fiscal year compared to 350,000 
units in 2006, rebounding after three consecutive years of 
decline. 
 
In the spring of 2009, Nissan Shatai Kyushu, a group company of 
Nissan Motor, will begin operations at its new production 
facility located inside the Nissan Kyushu Plant site and take 
over the assembly of models from other Nissan plants in Kanagawa 
Prefecture and Canton, Mississippi. 
 
The total production capacity at the Kyushu plant is expected to 
increase to 650,000 units per annum from the current 530,000 
units a year.  With Daihatsu's second plant due to be operational 
late this year, Kyushu's car manufacturing capacity by Nissan, 
Toyota, and Daihatsu combined will reach 1.54 million by 2009. 
(Fukuoka: Yuko Nagatomo/Jim Crow) 
 
¶16.  (U) Japan's First Privatized H-IIA Launch Vehicle Set for 
Launch 
--------------------------------------------- --------- 
 
On April 1, 2007, the Government of Japan awarded a contract to 
Mitsubishi Heavy Industries (MHI) for full development and launch 
of Japan's H-IIA space launch vehicle system. 
 
Previously, the Japan Aerospace Exploration Agency (JAXA) had 
been responsible for H-IIA program management, including research 
and development, launch operations, and management of the MHI 
development contract.  JAXA is now responsible for basic launch 
vehicle research and development, including development of the H- 
IIB series, as well as reliability improvement and safety 
monitoring of the H-IIA system. 
 
The intent of this privatization effort is to reduce launch costs 
and increase H-IIA launch service competitiveness on the 
international market.  The current H-IIA launch cost is about 10- 
12 billion yen ($88-105 million USD). 
 
In recent press coverage, JAXA stated that H-IIA development has 
reached a stage of maturity where it can be transferred to the 
private sector. 
 
MHI has not publicly released its target cost reductions but 
press reports indicate costs should be reduced to approximately 8 
billion yen ($69 million USD) to be internationally competitive. 
The first MHI-managed H-IIA launch (H-IIA F13) is scheduled to 
launch JAXA's Kaguya (SELENE) lunar satellite mission from 
Tanegashima Space Center on September 13.  For the first time, 
the MHI logo will appear above the JAXA logo on the H-IIA vehicle. 
(NASA:  Justin Tilman/Sumiko Mito) 
 
¶17.  (SBU) NTSB Chairman Visits Tokyo 
--------------------------------------------- --------- 
 
National Traffic Safety Board (NTSB) Chairman Mark Rosenker had 
informative courtesy calls with his counterparts in the Ministry 
of Land, Infrastructure and Transport's (MLIT) Aircraft and 
Railway Accidents Investigation Commission (ARAIC) and Japan 
Marine Accident Inquiry Agency (JMAIA) as well as MLIT 
Transportation Affairs Vice Minister Ken Haruta on August 24. 
 
Both sides took away some useful perspectives on how their 
respective organizations approach accident investigations. 
Rosenker had an extensive impromptu discussion on aviation safety 
matters with ARAIC sparked by a video viewing of the China 
Airlines fire in Naha, Okinawa, and NTSB's well-respected 
programs on outreach to the families' of accident victims, which 
was particularly interesting to the ARAIC. 
 
JMAIA thanked the chairman for help on the U.S.-sub-Japanese 
tanker collision.  ARAIC has 54 people and JMAIA 227 though there 
are plans to merge the two organizations.  VM Haruta expressed 
 
TOKYO 00004052  007 OF 010 
 
 
his appreciation for the NTSB's help on accident investigations 
and hosting Japanese accident investigators for training at 
NTSB's academy.  In all three meetings, there were strong 
expressions for continued close cooperation. 
 
Rosenker had planned to be in Japan a week and visit Toyota, 
Honda and Nissan's R&D facilities to learn about the cutting edge 
automotive active safety measures being developed here, before 
going onto a conference in Singapore. 
 
Rosenker's visit was cut short after the President asked for a 
briefing in Minneapolis on the bridge accident in mid-week, but 
Rosenker plans to return to Japan next year to look into the auto 
safety technologies.  (ECON:  Josh Handler) 
 
---------------- 
SECURITY UPDATES 
---------------- 
 
¶18.  (U) U.S.-Japan Bilateral Talks on Cyber-Security 
--------------------------------------------- --------- 
 
With the number and sophistication of internet malware attacks 
increasing dramatically, with the global cyber-crime industry now 
valued at $100 billion annually, surpassing the drug trade, US 
and Japanese officials and experts met on 28-29 August for two 
days of bilateral talks on cyber-security. 
 
These talks were the third such US-Japan bilateral meeting on the 
subject, but the first time the two sides have met since 2005. 
Both sides brought multi-agency and joint public-private sector 
delegations, and engaged in two days of intensive information 
exchange. 
 
Each side described its governance structures and procedures for 
cyber-security, including policy and planning, operational 
responses, and coordination with the private sector and other 
partners.  They shared assessments of current threats and 
vulnerabilities, and discussed information security trends and 
technology.  They examined the cyber-attack against Estonia 
earlier this year.  (ECON:  Scott Smith/Kaoru Nakata) 
 
¶19.  (SBU) Japan Customs Focuses on Illicit Guns and Drugs 
--------------------------------------------- --------- 
 
Highly public fatal shootings including the Nagasaki Mayor Itcho 
Ito in April and a riot police officer in Aichi Prefecture in May 
have put new pressure on Japanese Customs officials. 
 
In a meeting at the Ministry of Finance on Aug. 28, officials 
explained that Japan's security concerns differ from the US focus 
on international terrorism.  Local political pressure has 
required customs officials and leadership at customs to put more 
emphasis on gun control. 
 
Despite the fact that in the past five years, Japanese customs 
have confiscated an average of less than 10 weapons a year, the 
public and the politicians are demanding renewed efforts to keep 
guns out of Japan. 
 
Earlier this month law enforcement officials arrested four 
Chinese attempted to smuggle drugs into Osaka.  Officials 
explained that the predominately Chinese trade in amphetamines 
and synthetic drugs dominates their efforts.  (ECON:  Charlie 
Crouch) 
 
¶20.  (SBU) Japanese Immigrations to Implement Fingerprint 
Scanning on Nov. 20 
--------------------------------------------- --------- 
 
Members of the American Chamber of Commerce in Japan 
Transportation Committee met with Immigrations officials in Japan 
to learn about the fingerprinting requirements which will take 
effect November 20.  According to ACCJ members, Japanese 
Immigration changed its earlier indication that the law would 
allow crew members and re-entry permit holders to move through 
smoothly.  All crew members will be fingerprinted and all re- 
entry permit holders will be required to cue with all foreigners. 
"To protect Japan from terrorists," Immigrations officials said, 
all fingerprints will be compared against a database of known 
terrorists.  Officials said they do not intend to employ any 
additional personnel.  They have a self-ascribed goal that no 
 
TOKYO 00004052  008 OF 010 
 
 
customer should wait more than 20 minutes to process through 
immigrations. 
 
However, ACCJ members said that recently the wait had been as 
long as 50 minutes.  (ECON:  Charlie Crouch) 
 
¶21.  (SBU) Japan Works on Pilot Program for Radiological 
Screening at Yokohama 
--------------------------------------------- --------- 
 
Ministry of Foreign Affairs official told us that they asked the 
GOJ to modify the budget for next fiscal year to include funding 
for the purchase of radiological screening equipment. Japan would 
like to participate in the U.S. proposed screening for 
radioactive materials.  On August 3, President Bush signed into 
law the 9/11 Bill (H.R. 1) requiring that 100 percent of all 
inbound U.S. containers be scanned for radioactive content no 
later than July 1, 2012. 
 
In addition to buying radiological equipment, the MOFA official 
said Japan is also concerned about the construction, preparations 
and planning required before the equipment can be installed. 
Some members of the exporting community have voiced concern to 
Japanese ministries about the viability of screening 100 percent 
of shipped goods without considerable reduction in the movement 
of the supply chain. 
 
A major ocean-going cargo shipping firm's chief executive for 
North East Asia said as private citizen, I'm glad.  He said it 
will be difficult and will take time to determine exactly how the 
port scanning program will work.  He pointed out that the US 
clearly wouldn't stop its own inbound trade.  In the post 9/11 
world, he views the program as a necessity.  (ECON: Charlie 
Crouch) 
 
------------------------- 
JAPAN'S FOREIGN RELATIONS 
------------------------- 
 
¶22.  (SBU) Update on Western Japan-Korea Ties 
--------------------------------------------- --------- 
 
Last year the number of South Korean passengers outnumbered 
Japanese ones on the high-speed ferry between Busan and Hakata 
Port in Fukuoka, making Fukuoka Japan's gateway to Asia according 
to a recent Nikkei article.  Some 240,000 people enter Japan 
through Fukuoka port each year, making it the busiest harbor in 
Japan. 
 
South Korean visitors are having an economic impact, filling 
hotel rooms, freely spending at local department stores and using 
Fukuoka as a base to visit other tourist destinations in Kyushu. 
Fukuoka is also trying to deepen ties with Asian companies. 
At a Tokyo conference in late June on Japan-Korea relations, 
former governor of Tottori Prefecture Yoshihiro Katayama spoke 
movingly of his efforts during his tenure to encourage people-to- 
people exchanges between Tottori and South Korea and partner with 
regional Korean governments and legislatures. 
 
He noted Japanese people were unaware that the two countries 
enjoyed good relations for some 200 years from the 1600s to 1800s 
during which 12 Korean royal missions visited Japan to solidify 
ties.  He felt this history could be a helpful guide to the 
future of the relationship. 
 
Kazuyuki Matsubara, President of Taishuu Shipping Company on 
Tsushima Island and Chair of "Enchiren," an organization of 
 
SIPDIS 
Japanese towns with historical ties to royal missions from Korea, 
enthusiastically outlined the island's historical role as a 
bridge between Korea and Japan and its role in supporting these 
missions. 
 
When Korean President Roh Tae Woo visited Japan in 1990, 
Matsubara said, he talked about Amenomori Hoshu, an 18th century 
scholar and advisor to the lords of Tsushima, who helped further 
Korean-Japan relations in his speech to the Diet.  This renewed 
interest in Tsushima about the island's unique position in 
supporting the Korean missions.  This year is the 400th 
anniversary of the first mission, and Matsubara said his group 
was working actively with other cities on the missions' route 
through western Japan to Tokyo to arrange commemorative 
celebrations.  (ECON:  Josh Handler) 
 
TOKYO 00004052  009 OF 010 
 
 
 
¶23.  (U) Japan - India Model Coal Plant Progressing 
--------------------------------------------- --------- 
 
Japan and India continue to make good progress toward the joint 
development of a model power plant using clean coal technologies 
and expect to begin construction next year, a Trade Ministry 
(METI) official told us. 
 
India's coal contains 40 to 50 percent ash content causing 
excessive pollution.  The model plant, which will cost about $13 
million, will use technology to extract much of this ash content 
to reduce polluting emissions. 
 
The relatively low cost of the project is due to the fact that it 
is meant to be a model only and will have little commercial use. 
The two governments have not yet determined where the plant will 
be located, but it will likely be in the eastern part of India. 
According to METI, the model coal plant is one of twenty the GOJ 
has developed around the world, including 15 plants in China. 
 
Unlike the Indian plant, however, the Chinese plants were 100 
percent financed by the GOJ through its "Green Aid Plan."  Going 
forward, Japan intends to require that the Chinese government 
finance 50 percent of all future projects. 
 
While seeing the necessity in helping China reduce its carbon 
emissions through encouraging the use of clean coal technology, 
the METI official lamented the fact that the Japanese-provided 
technologies tended to be "absorbed" by the Chinese and therefore 
provided limited ongoing business opportunities for Japanese 
companies.  (ECON:  Sally Behrhorst/Eriko Marks) 
 
------ 
SPORTS 
------ 
 
¶24.  (U) Tokyo Heat Strains Electricity Grid but Nothing More 
Important than High School Baseball 
--------------------------------------------- --------- 
 
August in Japan this year has been unusually hot and humid with 
an attendant spike in demand for electric power.  Late August in 
Japan also means the annual National High School Baseball 
tournament, probably the most revered sporting event in the 
country. 
 
This year, the tournament's final was set for August 22 and 
featured underdog Saga Kita High School of Saga Prefecture, a 
rare public school contender making its first appearance at the 
fabled grounds of Kansai's Koshien Stadium, against long-time 
powerhouse Koryo High of Hiroshima. 
 
As the day of the big game dawned, Tokyo Electric Power Co. 
executives were already on edge.  The summer's long heat wave was 
straining the utility's power grid that was already under 
pressure since a July 16 earthquake shut down the Kashiwazaki- 
Kariwa nuclear power plant.  (See JES Volume 3 Issue #29 -- July 
26, 2007). 
 
By 7 a.m. temperatures in downtown Tokyo were already above 85 
degrees. Power demand was starting to surge.  By 11:30 a.m., 
total demand on TEPCO's system surpassed 60 million kilowatts and 
the utility was down to its last 1.6 percent of supply capacity. 
Executive Vice President Takashi Fujimoto decided to take 
emergency measures, asking 23 major industrial to cut back 
consumption between 1 p.m. and 5 p.m. in accordance with their 
supply contracts, and reactivating the Shiobara hydroelectric 
power plant in Tochigi Prefecture. 
 
Shortly before noon, TEPCO briefed the Ministry of Economy, Trade 
and Industry on the situation and the ministry held an urgent 
press conference asking people to cut back on power use.  In 
buildings across the country, lights were turned off and air 
conditioner settings raised to 85 degrees. 
 
The Saga-Koryo game began at 1 p.m. and shortly after 2 p.m. 
total electricity demand spiked at 61.47 kilowatts. But once the 
game ended just after 3 p.m., total demand fell sharply and 
failed to reach hit TEPCO's revised forecast of 61.5 million 
kilowatts.  A crisis averted, TEPCO top brass breathed an audible 
sigh of relief. 
 
TOKYO 00004052  010 OF 010 
 
 
 
And at Koshien?  Well, Saga Kita, on the back of a five-run 
eighth inning including a grand-slam home run, came from behind 
to beat Koryo, 5-4.  (ECON:  David DiGiovanna) 
 
¶25.  (U) This SENSITIVE BUT UNCLASSIFIED e-newsletter from U.S. 
Embassy Tokyo's Economic Section, with contributions from the 
consulates, is for internal USG use only.  Please do not forward 
in whole or in part outside of the government.  The Scope is 
edited this week by Charlie Crouch (CrouchCA@state.gov) and Joy 
Progar (ProgarJ@state.gov). 
 
¶26.  (U) Please visit the Tokyo Econ Intranet webpage for back 
issues of the Scope.  Apologies, this option is only available to 
State users.  Please contact Joy Progar if you are from a 
different agency and are interested in a back issue. 
DONOVAN