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UNCLAS SECTION 01 OF 10 TOKYO 005310 
 
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 11/21/07 
 
 
Index: 
 
1) Prime Minister's daily schedule (Nikkei) 
 
2) Defense Minister Ishiba: Need to reduce host-nation support by 
cutting pay of Japanese employees at US bases  (Sankei) 
 
Diet frenzy: 
3) Former defense chief and now finance minister Nukaga to be 
grilled in Diet on allegations of impropriety (Nikkei) 
4) New charge of kickbacks from defense contractors added to list of 
questions for Nukaga in the Diet (Tokyo Shimbun) 
5) Democratic Party of Japan's (DPJ) bill to withdraw ASDF from Iraq 
will pass committee on the 27th (Sankei) 
6) Ruling camp's antiterrorism bill, delayed in the Upper House by 
DPJ tactics, will finally enter full deliberations on Nov. 28 or 
later (Yomiuri) 
7) Prime Minister Fukuda's meeting with other party heads on Nov. 22 
worries the DPJ while filling the LDP with anticipation of 
breakthrough (Mainichi) 
 
Asia diplomacy: 
8) Fukuda, Chinese Premier Wen in Singapore meeting promise to make 
efforts to resolve gas-field development issue (Asahi) 
9) Chinese President Hu to visit Japan next spring (Tokyo Shimbun) 
 
 
10) In trilateral meeting of Japan, China, ROK premiers, Fukuda 
states his desire to normalize relations with North Korea (Yomiuri) 
 
11) Summitry in Singapore allows Fukuda chance to improve Japan's 
ties with its neighbors China and South Korea (Mainichi) 
12) Text of Japan-China summit meeting and luncheon meeting 
(Yomiuri) 
 
Economic policy: 
13) Government panel calls for consumption tax hike by 2009 in order 
to fund growing social security expenditures (Nikkei) 
14) Poll shows 50 PERCENT  of public now willing to accept a 
consumption tax hike as "inevitable," outweighing those against the 
move (Mainichi) 
 
Articles: 
 
1) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, November 20 
 
NIKKEI (Page 2) (Full) 
November 21, 2007 
 
Morning Met Chinese Premier Wen Jiabao and South Korean President 
Roh Moo Hyun at the Grand Hyatt Hotel in Singapore. Later, held 
one-on-one talks with Wen. 
Noon Had luncheon with Wen 
Afternoon Attended the ASEAN plus Japan, China and South Korea 
summit at the Shangri-La Hotel. Met Roh. 
Evening Held talks with Cambodian Prime Minister Hun Sen, Laotian 
Prime Minister Bouasone, Vietnamese Prime Minister Nguyen Tan Dung 
at the Four Seasons Hotel. Later held talks with Dung. 
Night Attended a dinner party hosted by Singaporean Prime Minister 
Lee Hsien Loong and his wife at the Swissotel Hotel. Stayed at the 
 
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Four Seasons Hotel. 
 
2) Wage cuts needed for base workers: Ishiba 
 
SANKEI (Page 5) (Full) 
November 21, 2007 
 
In connection with the issue of curtailing Japan's sharing of costs 
for the stationing of US forces in Japan ("omoiyari yosan" or 
literally "sympathy budget"), Defense Minister Shigeru Ishiba, 
meeting the press yesterday, referred to the level of wages for base 
workers. "It is higher than that for (other) people working in 
Okinawa," Ishiba said. "I wonder if this (wage) payment can really 
obtain understanding," he added. With this, Ishiba suggested the 
need for the government to cut down on various allowances for base 
workers. Ishiba also said, "We must not neglect the Financial System 
Council's report (which seeks to scale back on the costs)." The All 
Japan Garrison Forces Labor Union (Zenchuro), consisting of base 
workers, will go on a time-limited strike today for four hours 
against wage cuts. 
 
3) Government, ruling coalition having hard time dealing with 
Defense Ministry scandals, Nukaga might have to take responsibility; 
Opposition prioritizes shedding light on scandals, deliberations on 
new refueling bill would delay 
 
NIKKEI (Page 2) (Full) 
November 21, 2007 
 
The government and ruling parties are having a hard time coping with 
a recently revealed allegation in connection with Finance Minister 
Fukushiro Nukaga. There is no prospect for deliberations on a bill 
to resume the Maritime Self-Defense Force's refueling activities in 
the Indian Ocean since the opposition camp has assumed a stance of 
prioritizing the shedding of light on the allegation. Some in the 
government and ruling coalition are now concerned about the possible 
adverse impact on the compilation of the state budget for next 
fiscal year, which will take place in late this year. The allegation 
might develop into an issue in which Nukaga would have to take 
responsibility (and resign). 
 
"He seems to have asked those involved at the time, and I have heard 
that that there was no such fact," said Chief Cabinet Secretary 
Nobutaka Machimura in a press conference yesterday. Machimura, based 
on the Defense Ministry's information, denied the allegation that 
Nukaga had helped a Yamagata construction firm take part in bidding 
for a project for the former Sendai Defense Facilities 
Administration Bureau in 2000. Liberal Democratic Party (LDP) 
Secretary General Bunmei Ibuki also stressed in a press briefing 
 
SIPDIS 
yesterday: "The construction company also denied it and a former 
Defense Facilities Administration Agency (DFAA) official said that 
such would have been impossible." Although senior government and LDP 
officials have now lined up on to back Nukaga, they are perplexed 
about what action the opposition bloc will take. 
 
The most serious issue is a delay in a schedule for deliberations on 
the new refueling legislation. In his meeting yesterday with 
Democratic Party of Japan (DPJ or Minshuto) Diet Affairs Committee 
Chairman Susumu Yanase, LDP Upper House Diet Affairs Committee 
Chairman Seiji Suzuki proposed again starting deliberations on Nov. 
26, but Yanase rejected the proposal, saying, "We should prioritize 
shedding light on the allegation rather than starting 
 
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deliberations." 
 
Referring in a press conference yesterday to Nukaga having denied 
being wined and dined by former Yamada Corp. executive Motonobu 
Miyazaki, who is now under arrest, DPJ President Ichiro Ozawa 
underscored: "Since the two sides' remarks are different, it's 
better to reveal the facts." Diet Affairs Committee Chairman Kenji 
Yamaoka told the press: "The restaurant in which they assembled has 
almost been identified. When supportive evidence is provided, the 
facts will be revealed." 
 
Four opposition parties -- the DPJ, Japanese Communist Party, Social 
Democratic Party and People's New Party -- confirmed in a meeting 
yesterday of their Diet affairs committee chairmen that they would 
thoroughly clear this matter up. The opposition side intends to 
clear up the facts in a session today of the Lower House Finance 
Committee, in which Nukaga will attend. Depending on Nukaga's 
replies, the opposition eyes testimonies in the Diet by witnesses 
and launching a no-confidence motion against Nukaga. 
 
4) Nukaga may be summoned over favors 
 
TOKYO SHIMBUN(Page 2) (Full) 
November 21, 2007 
 
There are now suspicions arising about whether Finance Minister 
Fukushiro Nukaga favored a specific construction company (when he 
was a deputy chief cabinet secretary) in connection with the then 
Defense Facilities Administration Agency's designation of 
contractors for a construction project ordered by its Sendai bureau. 
In response, four opposition parties confirmed yesterday that they 
would pursue the allegation against the Defense Ministry, with an 
eye to the possibility of summoning Nukaga to the Diet as a sworn 
witness. In particular, the leading opposition Democratic Party of 
Japan (Minshuto), emboldened by its recommended candidate's victory 
in the recent mayoral race in the city of Osaka, is ready to face 
off with the government and ruling parties. 
 
DPJ President Ichiro Ozawa, in a press conference yesterday, noted a 
gap between Nukaga's comment and a former DFAA Sendai bureau 
director general's remarks in which this former DFAA official 
revealed that he was asked by Nukaga to favor a local constructor. 
"It would be better to clarify whether it was true or not," Ozawa 
said. With this, Ozawa stressed that the DPJ would ask Nukaga to 
explain the suspicions in the Diet. 
 
Earlier in the day, the DPJ, the Japanese Communist Party, the 
Social Democratic Party, and the People's New Party held a meeting 
of their Diet affairs committee chairmen and the four opposition 
parties concurred on pursuing the suspicions over the Defense 
Ministry thoroughly in the Diet's lower and upper chambers. The 
opposition bench will ask the government about the series of 
scandals in a House of Representatives Financial Affairs Committee 
meeting to be held today and also in a House of Councillors 
Financial Affairs Committee meeting to be held tomorrow. Nukaga is 
to be present at both meetings. 
 
"We will check whether the suspicions are cleared in his (Nukaga's) 
statements before the committees," DPJ Secretary General Yukio 
Hatoyama told reporters. "If the suspicions are found even stronger, 
then he may have to be summoned as a sworn witness," he added. 
 
 
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5) Iraq pullout bill: Committee vote set for Nov. 27 
 
SANKEI (Page 5) (Full) 
November 21, 2007 
 
The ruling Liberal Democratic Party and the leading opposition 
Democratic Party of Japan (Minshuto) yesterday held a meeting of 
their Diet affairs committee chairmen, Seiji Suzuki and Susumu 
Yanase, from the House of Councillors over a DPJ-introduced bill 
repealing the Iraq Reconstruction Assistance Special Measures Law. 
In the meeting, Suzuki and Yanase agreed to schedule the House of 
Councillors Foreign Affairs and Defense Committee to hear the DPJ's 
explanation of reasons for its presentation of the bill and to 
schedule the committee to take a vote on Nov. 27 after 
interpellations. 
 
The bill is likely to clear the Diet's upper chamber in its plenary 
sitting on Nov. 28 with a majority of votes from the DPJ and other 
parties, and it will be sent to the House of Representatives. 
However, the ruling parties hold a majority of the seats in the 
lower chamber. The bill is therefore expected to be voted down or 
scrapped there. 
 
6) Storm over antiterrorism bill makes another extension of the Diet 
session likely; With DPJ pursuing Yamada Yoko Corp. scandal, 
deliberation of the bill not until after 28th 
 
YOMIURI (Page 4) (Excerpts) 
November 21, 2007 
 
Passage in the current session of the Diet of the new antiterrorism 
special measures bill, which the government and ruling camp have 
given top priority, has become difficult, and a decision to make 
another extension of the Diet is now highly likely. However, the 
Democratic Party of Japan (DPJ) is not only opposed to passage of 
the bill, the party has shown its intent to put every effort into 
clearing up allegations centered on the Yamada Yoko Corp., a trading 
firm specializing in air and defense areas. The fate of the bill 
remains as confused as ever. 
 
The Diet session has already been extended 35 days beyond its 
original closing date of Nov. 10. The judgment then was that if 
there was another month, it would be able to ensure enough hours of 
deliberation (41) even in the Upper House, as well as the Lower 
House. 
 
However, the DPJ adopted a strategy of seeking priority deliberation 
on its bill to scrap the Iraq reconstruction and assistance special 
measures law, and to force deliberations on the antiterrorism 
special measures bill to run out of time. In addition, the DPJ 
gathered further momentum when the witness it called on the 15th, 
former Vice Defense Minister Moriya, stated that former defense 
chiefs Kyuma and Nukaga had been invited by the former chief 
executive of Yamada to the same banquet he had attended. The outlook 
now is that the new antiterrorism bill, sent to the Upper House on 
the 13th, will not be deliberated on until the 28th or later. 
 
The government and ruling camp aim to pass the bill this Diet 
session. Since the DPJ, anticipating another extension, is applying 
the provision of the law that if the Upper House does not act on the 
bill in 60 days, it is considered rejected, the ruling camp is 
taking the position of readopting the bill in the Lower House by a 
 
TOKYO 00005310  005 OF 010 
 
 
two-thirds majority. The view that has emerged is to re-extend the 
session until mid to late January. 
 
However, the New Komeito is concerned that if the bill is passed by 
re-extending the Diet, the DPJ will protest and could file a censure 
motion against Prime Minister Fukuda, which would lead to a 
dissolution of the Lower House (for a snap election). 
 
For that reason, Prime Minister Fukuda will meet with each party 
head on the 22nd, explain to them the significance of the 
antiterrorism bill, and urge that they meet him half way on it. 
 
However, DPJ head Ozawa yesterday at a press conference clearly 
stated: "since there is a basic difference in thinking, including 
interpretation of the Constitution, no matter how the prime minister 
makes his plea, we cannot change (our stance opposing the bill)." 
 
7) DPJ apparently alarmed about tomorrow's party-head talks; 
Government, ruling coalition, express expectations 
 
MAINICHI (Page 5) (Slightly abridged) 
November 21, 2007 
 
With one-one-one meetings between Prime Minister Yasuo Fukuda, 
president of the ruling Liberal Democratic Party (LDP), and other 
party leaders coming up tomorrow, the government and ruling parties 
are hoping to break the impasses in the Diet, while opposition 
parties are alarmed. Prime Minister Fukuda and DPJ President Ichiro 
Ozawa will hold talks for the first time since they discussed a 
grand coalition on Nov. 2. Since the media reported allegations that 
Finance Minister Fukushiro Nukaga had asked a former Defense 
Facilities Administration Agency regional bureau to include a 
Yamagata construction firm to include in bidding on its project, 
some members of the DPJ, which has strengthened its offensive, are 
now suspicious about a revival of the policy of placing emphasis on 
discussions. 
 
In a press conference yesterday, Chief Cabinet Secretary Nobutaka 
Machimura expressed his expectations for party-head talks, while 
referring to a review of debates in the two houses of the Diet. He 
stated: "There are a mountain of important bills. With the Diet 
divided, we must discuss what Diet rules should be created. 
 
Fukuda declared in the recent Japan-US summit that he would do his 
best to enact as early as possible the new antiterrorism special 
measures bill. However, it is difficult to pass the legislation 
within the current Diet session, which will end on Dec. 15. DPJ 
President Ichiro Ozawa yesterday underscored his opposition to the 
bill, saying, "Since it is a basic difference on the overseas 
dispatch of the Self-Defense Forces (SDF), we cannot change our 
position, even if we are asked to support the bill." 
 
The DPJ has called on the government and ruling coalition to 
prioritize shedding light on a series of scandals involving the 
Defense Ministry and Nukaga. Fukuda will likely ask other party 
leaders to deal separately with the scandals and deliberations on 
bills. 
 
Many in the DPJ are alarmed about the idea of forming a grand 
coalition with the LDP reappearing. 
 
LDP Diet Affairs Committee Chairman Tadamori Oshima told his DPJ 
 
TOKYO 00005310  006 OF 010 
 
 
counterpart Kenji Yamaoka on Nov. 16: "We want to hold a party-head 
meeting after holding a meeting of the secretaries general on 
issues, including policy consultations." Yamaoka immediately turned 
down the offer, saying, "We don't want to discuss a grand coalition, 
so we can't hold policy consultations." Oshima suggested holding a 
party-head meeting on the 19th, saying, "The prime minister wants to 
talk about his overseas trips. He will meet with other party 
leaders, as well." Yamaoka reportedly was unable to refuse the 
request. 
 
8) Japanese, Chinese top leaders agree to make effort to settle gas 
field issue: Prime minister indicates his intention to visit China 
at early date 
 
ASAHI (Page 1) (Full) 
November 21, 2007 
 
Singapore, Shinji Ineda 
 
Prime Minister Fukuda separately met with Chinese Premier Wen Jiabao 
and South Korean President Roh Moo Hyun in Singapore for the first 
time since taking office. Fukuda during his summit meeting with Wen 
expressed his intention to visit China either before the end of the 
year or early next year. Both leaders agreed to make efforts for a 
settlement of the issue of jointly exploring natural gas fields in 
the East China Sea. However, they did not touch on any specific 
timeframe for launching exploration. During the Japan-South Korea 
summit, the leaders reached an agreement to develop future-oriented 
bilateral relations. Fukuda indicated his desire to normalize ties 
between Japan and North Korea, by settling the abduction issue and 
past accounts (from the colonial period). 
 
Wen noted that joint development of gas fields is a highly complex 
and sensitive issue. However, he said that he wanted to see both 
sides bravely tackle the issue and make efforts to settle it, based 
on the common perception on the joint development of a relatively 
wide area, as agreed on when Wen came to Japan in April. Fukuda 
responded, "I want to settle the issue for the sake of the 
development of Japan-China relations." However, neither side 
proposed a timetable to settle the joint development issue, though 
the arrangement had been to map out a concrete plan by this fall. 
 
Both leaders also agreed to strengthen strategic and 
mutual-beneficial relations and cooperation in the security area, 
which the two countries agreed on when former Prime Minister Abe 
visited China. Wen asked Fukuda to visit China at an early time. 
Fukuda conveyed his intention to visit at an early date, based on 
the Diet situation. 
 
Wen pointed out, "Dealing with the historical and Taiwan issues 
properly is the basis of politics for maintaining Japan-China 
relations." With the upcoming presidential election in Taiwan in 
mind, Wen stated, "I hope Japan will appropriately deal with the 
Taiwan issue." Fukuda indicated his view, "Regarding Taiwan, it is 
important to maintain peace on both sides of the Taiwan Strait. 
There is no change in our stance." 
 
President Roh during his summit with Fukuda pointed out that General 
Secretary Kim Jong Il was clearly aware that it was important to 
 
SIPDIS 
improve relations between the US and North Korea and relations 
between Japan and North Korea in order for North Korea to move 
toward peace and prosperity. 
 
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9) Japanese, Chinese leaders agree on trip to Japan by President Hu 
next spring 
 
TOKYO SHIMBUN (Page 1) (Full) 
November 21, 2007 
 
Hitoshi Tojo, Singapore 
 
Prime Minister Yasuo Fukuda expresses his desire to Chinese Premier 
Wen Jiabao during their talks in Singapore on Nov. 20 to visit China 
by the end of this year. Following Fukuda's remarks, the two leaders 
agreed to realize a visit to Japan by Chinese President Hu Jintao 
next spring. 
 
At the outset of the talks, Wen said that Japan-China relations are 
"at an important turning point" and then invited Fukuda to visit 
China by the end of the year. Fukuda replied that while watching the 
Diet situation, "I want to visit China by the end of the year or 
early next year if possible. I anticipate President Hu will visit 
Japan next year. We would like to start coordination to that end." 
 
In reference to the issues of past accounts and Taiwan, Wen 
emphasized: "Appropriately resolving these issues is the political 
basis to maintain good Japan-China relations." The Chinese premier 
also said: "I hope Japan will properly deal with the Taiwan issue 
prior to the (Taiwanese presidential) election next March." 
 
In response, Prime Minister Fukuda said: "I expect that relations 
between both sides will peacefully develop in the international 
community." 
 
10) Prime minister expresses eagerness to normalize diplomatic ties 
with North Korea during Japan-China-South Korea summit 
 
YOMIURI (Page 2) (Full) 
November 21, 2007 
 
Ayumu Tsuda and Shoji Minami, Singapore 
 
In a meeting of the leaders of Japan, China and South Korea on Nov. 
20, Prime Minister Fukuda expressed eagerness to normalize 
diplomatic relations between Japan and North Korea after resolving 
bilateral pending issues. Fukuda said: "I will continue utmost 
efforts to settle the issue of Japanese nationals abducted by North 
Korea and unfortunate past accounts. I would like China and South 
Korea to continue to support our efforts." Chinese Premier Wen 
Jiabao and South Korean President Roh Moo-Hyun promised to offer 
cooperation. 
 
Prime Minister Fukuda said: "I hail the progress made by North Korea 
toward disabling its nuclear facilities" in the six-party talks. But 
he added: "It is important to have North Korea abandon its nuclear 
facilities and weapons. It is still half done. The issue of missile 
development has also been left unresolved." 
 
The three leaders agreed to hold another round of trilateral summit 
on a different occasion from the Association of Southeast Asian 
Nations (ASEAN) summit. 
 
They also decided (1) to draw up an action program for the three 
countries to cooperate on economic and environment policies; (2) to 
 
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accelerate negotiations on concluding an investment accord; and (3) 
to hold trilateral foreign ministerial and vice foreign ministerial 
talks in Japan next year. 
 
11) ASEAN pins hopes on Prime Minister Fukuda repairing relations: 
Prime minister's cooperative stance to contribute to stabilization 
of Asia 
 
MAINICHI (Page 2) (Full) 
November 21, 2007 
 
The Association of Southeast Asian Nations (ASEAN) is pinning high 
hopes on the diplomatic stance of Prime Minister Yasuo Fukuda, who 
advocates giving importance to Asia. Since ASEAN members strongly 
feel that Japan, China and South Korea, major powers in the region, 
maintaining friendly relations will lead to regional stabilization, 
they have a good impression of Fukuda because of his positive stance 
toward repairing and developing Japan's relations with China and 
South Korea. 
 
Likening Prime Minister Fukuda to former Prime Minister Takeo 
Fukuda, his father, the Straits Times, a leading paper of ASEAN-host 
nation Singapore, on Nov. 16 carried a favorable article on Fukuda, 
which said, "Prime Minister Fukuda's diplomatic stance will likely 
be close to that of his late father, who is regarded as a good 
friend of Southeast Asia." 
 
Takeo Fukuda in August 1977 visited Manila and declared there that 
Japan will contribute to the peace and prosperity of Southeast Asian 
nations on an equal footing without becoming a military power. This 
Fukuda Doctrine is remembered by politicians and diplomatic sources 
of various countries as the basic spirit of the starting point for 
creative relations between Japan and ASEAN. 
 
ASEAN, which marked the 40 anniversary of its founding, is promoting 
regional cooperation with partnership as the catchword. This is the 
wisdom of the association of small countries that are weak in 
diplomatic and economic terms. With their diplomatic efforts coming 
to fruition, they, as the only regional community in East Asia, have 
developed multi-tiered frameworks, such as ASEAN plus Japan, China 
and South Korea (joined by 13 countries) and the East Asia Summit 
including India (joined by 16 countries), involving neighbors, such 
as Japan and China. 
 
However, relations between China and Japan were strained during the 
Koizumi administration, which attached importance to relations with 
the US, damaging the overall cooperative mood. During this period, 
China positively approached ASEAN, while the diplomatic clout of 
Japan, the most reliable partner of ASEAN, according to former 
Philippine Foreign Minister Siazon, declined. 
 
ASEAN thinks it ideal to promote overall cooperation, while 
achieving a good balance both with China and Japan. Prime Minister 
Fukuda's stance of repairing relations with China and attaching 
importance to Asia is acceptable in the sense of restoring the 
collapsed diplomatic balance. 
 
ASEAN members are closely watching what policy Prime Minister Fukuda 
will come up with as a second Fukuda doctrine and how he is going to 
develop new relations. 
 
Singapore, Satoru Fujita 
 
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12) Gist of Japan-China summit meeting and dinner meeting 
 
YOMIURI (Page 4) (Full) 
November 21, 2007 
 
Overall Japan-China relations 
 
Prime Minister Wen: China-Japan relations are at an important 
historical stage and critical turning point in their development. 
Both countries must continue to move forward constantly. I would 
like to next year to be the year of youth friendship exchanges. 
 
Prime Minister Fukuda: Our main challenge will be how to promote a 
strategic mutually beneficial relationship. Exchanges of young 
people will be vital for the bilateral relationship. 
 
Exchanges in the summit meeting 
 
Wen: If possible, I would like you to visit China this year. Your 
visit to China and the visit to Japan by President Hu Jintao next 
spring will be highly significant for the long-term development of 
bilateral relations. I would like them to be worked out 
successfully. 
 
Fukuda: I would like to do my utmost to visit this year or as early 
as possible next year. 
 
East China Sea gas-field development 
 
Wen: I would like both sides to make efforts so that joint gas-field 
development can be tackled with vigor and resolved. 
 
Fukuda: I would like to ask Prime Minister Wen to display your 
leadership to resolve this quickly. 
 
North Korea problem 
 
Fukuda: It is important to resolve the nuclear issue. It is also 
vital that the abducted victims return home. I ask for your 
understanding and cooperation. 
 
Wen: I express my understanding and sympathy. I would like to offer 
whatever cooperation is needed. 
 
Defense exchanges 
 
Fukuda: I welcome the arrival of a Chinese naval vessel to Japan 
next week. I would like to send a ship to China at an appropriate 
time. Promotion of exchanges in the security area is extremely 
important for mutual understanding. 
 
Wen: I understand exactly the need for mutual peace and development, 
and the importance of deepening the dialogue in the security area. 
 
Taiwan problem 
 
Wen: Properly dealing with this issue is the political foundation 
that upholds the China-Japan relationship. With the Taiwanese 
presidential election coming next March, the Taiwan situation has 
become delicate. I would hope to see the Japanese side to deal with 
this properly. 
 
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Fukuda: I hope to see peaceful developments on both shores. 
 
Japanese exports of rice 
 
On the question of export of Japanese rice to China, both prime 
ministers said it would be implemented after the second time. 
 
13) Government's Tax Research Commission report sees consumption tax 
as funding for social security: Government, ruling parties eye tax 
hike in fiscal 2009 or later 
 
NIKKEI (Top Play) (Excerpts) 
November 21, 2007 
 
The government's Tax Research Commission (an advisory organ 
reporting to the prime minister) at a plenary session on Nov. 20 
finalized a report in the run-up to annual tax code revisions for 
fiscal 2008. The report categorically mentioned for the first time 
in three years the need to hike the consumption tax in order to 
finance social security spending, which is increasing due to the 
aging society, by characterizing the tax as key fiscal resources for 
social security. The report also indicated the possibility of 
drastic tax reform matching structural changes in society, including 
revisions to various deductions in the income tax and a cut in the 
effective corporate tax rate. However, since it is difficult to 
realize any of the proposals, drastic reform, including a 
consumption tax hike, will be delayed until fiscal 2009 
 
The title of the report is "Basic View for Drastic Tax System 
Reform." The Tax Research Commissions issues an annual report 
including proposals for amending the tax systems for the next fiscal 
year and a mid-term policy report indicating a direction for a mid- 
to long-term reform policy, which comes out every three years. The 
report this time is a version combining both types of reports. 
 
14) Poll: 50 PERCENT  consider consumption tax hike inevitable 
 
YOMIURI (Page 2) (Excerpts) 
November 21, 2007 
 
According to a Yomiuri nationwide interview-based opinion poll 
conducted on Nov. 10-11, 50 PERCENT  of respondents consider it 
inevitable or somewhat necessary that the consumption tax rate must 
rise to maintain the current social security system, including the 
pension program, exceeding the 48 PERCENT  of respondents who 
consider a consumption tax hike unnecessary. In the nationwide poll 
conducted in October last year, 49 PERCENT  said a tax hike was 
inevitable, while an equal number said it was unnecessary. In the 
poll this time around, the number of those resigned to a consumption 
tax hike slightly topped those opposing it. The result will likely 
affect tax debate in the future. 
 
By gender, 54 PERCENT  of male respondents said they believed a tax 
hike was unavoidable, 10 PERCENT  higher than those who did not 
think so. Of the female respondents, 52 PERCENT  said they did not 
think a hike was necessary, against 46 PERCENT  who considered it 
inevitable. By age, more than half of those aged 50 or older 
believed a hike was inevitable. 
 
SCHIEFFER