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UNCLAS SECTION 01 OF 08 TOKYO 000206 
 
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:  DAILY SUMMARY OF JAPANESE PRESS 01/25/08 
 
 
INDEX: 
 
(1) FTC to abolish penalty-assessment system in bid-rigging, cartel 
cases two years later (Nikkei) 
 
(2) Interview with LDP Secretary General Bunmei Ibuki: DPJ should 
shift to dialogue line (Yomiuri) 
 
(3) Japan-U.S. Joint Committee decides to return Gimbaru to Japan; 
Helipad relocation plan gains momentum (Ryukyu Shimpo) 
 
(4) 2008 regular Diet session: 
Provisional-rate-is-for-the-sake-of-ecology argument; LDP - 
"Abolition will increase CO2 emissions; DPJ - "LDP is deceiving tax 
payers" (Mainichi) 
 
(5) Government to boost trade insurance for resource development to 
one trillion yen (Nikkei) 
 
(6) Rengo, Keidanren leaders start discussion on spring labor 
offensive; Fierce battle on wage increase (Sankei) 
 
ARTICLES: 
 
(1) FTC to abolish penalty-assessment system in bid-rigging, cartel 
cases two years later 
 
NIKKEI (Top play) (Full) 
January 25, 2008 
 
The Fair Trade Commission (FTC) has decided to boldly review the 
current penalty-assessment system (shinpan seido) under which the 
watchdog judges whether to impose penalties on companies violating 
the Antimonopoly Law. The FTC plans to enable companies dissatisfied 
with surcharge payments or other administrative measures imposed on 
them by the commission in bid-rigging or cartel cases to appeal 
directly to the courts. In planned corporate merger and unfair 
pricing cases, the FTC will change the current structure and make it 
possible for the FTC to make a judgment after listening to 
explanations from companies concerned. The FTC's decision reflects 
growing calls from the business community for scrapping the 
penalty-assessment system. 
 
The FTC intends to specify the planned changes to the 
penalty-assessment system in a bill amending the Antimonopoly Law it 
plans to submit to the ongoing ordinary Diet session. 
 
Under the current system, the FTC passes judgment on appeals filed 
by businesses against penalties the commission had handed down, such 
as surcharge payments or other administrative measures, on them for 
big-rigging or cartel practices. The FTC will first abolish this 
post-verdict assessment system in two years. It then will introduce 
a system to enable businesses accused of big-ridding or cartel 
practices, on which speedy judgment is required, to file complaints 
directly with the courts. 
 
For other illegal practices, such as planned corporate mergers and 
unfair pricing practices, the FTC will introduce a prior-verdict 
system under which FTC investigators and the accused firms will 
present their respective views and evidence. Based on such 
information, the FTC will determine penalties. 
 
 
TOKYO 00000206  002 OF 008 
 
 
On the planned systemic changes, the bill is expected to include the 
wording: "The current post-verdict assessment system will be 
eliminated after detailed studies are conducted within two years 
from now." 
 
The business community and the Liberal Democratic Party have long 
been calling for changes to the post-verdict assessment system, 
raising a question about fair judgment by the FTC because it has 
acted as both prosecutor and judge. But the FTC's basic guidelines 
for the Antimonopoly Law, released last October, stated that the 
post-verdict assessment system would be kept in place for the time 
being. In part because the guidelines also called for stricter 
penalties for repeated offenders, the business world became more 
vocal in demanding abolishing the FTC's penalty-assessment system. 
 
To ensure the passage of its bill amending the Antimonopoly Law in 
the current ordinary Diet session, the FTC judged that it would have 
to offer some concessions on the penalty-assessment system. Based on 
its new revision plans, the commission will launch final 
coordination with the ruling coalition and relevant government 
agencies. But some are calling for completely scrapping the 
assessment system and entrusting all cases to the courts. So the FTC 
may be pressed for more concessions. 
 
(2) Interview with LDP Secretary General Bunmei Ibuki: DPJ should 
shift to dialogue line 
 
YOMIURI (Page 4) (Full) 
January 25, 2008 
 
Interviewer: Hajime Furukawa 
 
-- How do you plan to discuss policy issues with the major 
opposition Democratic Party of Japan (DPJ) in the current ordinary 
session of the Diet? 
 
Bunmei Ibuki, secretary general of the ruling Liberal Democratic 
Party (LDP): According to opinion polls, those who approved passage 
of the new antiterrorism legislation outnumbered those who 
disapproved. But when asked about adoption in the Lower House by a 
re-voting on the legislation that requires a two-third majority, a 
large number of those polled called such a method "inappropriate." 
This could be taken as a criticism for both sides' failure to 
discuss the bill in detail. I think both the ruling and opposition 
parties need to take this criticism seriously and show wisdom as to 
how to hold subject-selective policy debate, how to establish a 
policy consultative body, and further how to form a grand 
coalition." 
 
-- How will you deal with the selection of a successor to the 
current Bank of Japan (BOJ) governor? 
 
Ibuki: The BOJ governor has more influential on money markets than 
the finance minister. The finance minister and the BOJ governor are 
the key officers for fiscal and financial affairs. It is illogical 
to argue that a former bureaucrat is not qualified for the post. We 
will welcome the DPJ's recommendation, but if the DPJ argues that it 
will not approve anyone who is not recommended by it, nothing can be 
decided. 
 
-- The DPJ is opposed to a bill revising the Special Taxation 
Measures Law, the purpose of which is to maintain the current 
 
TOKYO 00000206  003 OF 008 
 
 
gasoline tax rate. 
 
Ibuki: This is not a simple question of whether to construct roads 
or not. If the bill is not adopted, local governments would suffer 
budgetary shortfalls. If the public is asked which to prefer, a 
higher tax or a lower tax, it is only natural for the public to 
prefer a lower tax. It is wrongheaded to focus on only one aspect of 
the public feelings and make it a source for a political struggle. 
Tax-related bills to back the estimated revenue have never failed to 
be approved by the end of the year, once the budget bill was 
approved. If the bills backing the estimated revenues are not 
adopted, annual expenditures will not be underwritten. The Upper 
House must make clear its attitude by March 31; otherwise the 
principle of (putting finances under the parliament's control) will 
crumble at its foundation. 
 
-- Regarding the basic pension, the government intends to raise the 
ratio of the amount to be financed by the national coffers in fiscal 
2009 to 50 PERCENT . But debate on a consumption tax hike has 
stalled. 
 
Ibuki: We must figure out how much of an automatic increase in tax 
revenues there will be in fiscal 2009. Prime Minister Fukuda called 
on the DPJ to join the Council on Social Security, but the DPJ 
refuses to do so. The DPJ in a way is suffering a trauma from its 
victory in the latest Upper House election. It does not appear it 
will recover from it before the next Lower House election. 
 
-- When do you think the next Lower House election will take place? 
 
Ibuki: If the DPJ opts for holding discussions with the ruling bloc 
on tackling policy issues, I think we will become flexible about the 
timing of the next Lower House election. If the DPJ remains in its 
current state of mind and should the ruling parties lose their 
current two-thirds majority of seats in the Lower House, the Diet 
will not be able to function. That's why we have concluded that the 
Lower House will not be dissolved before the termination of the 
term, because the Diet will be no longer be able to function. If the 
DPJ asserts that it is necessary to seek the judgment of the public, 
then the DPJ should become willing to hold discussions with the 
ruling bloc. 
 
-- How many seats would you aim to win in the next Lower House 
election? 
 
Ibuki: We don't have any intention to set the stage for the next 
Lower House election. But if we accept the opposition bloc's 
challenge, the ruling bloc, namely, the LDP and its junior coalition 
partner New Komeito, will aim to garner at least 241 seats, which 
constitutes a majority. Our desire is to grab a single-party 
majority. 
 
-- Do you think another political realignment will occur? 
 
Ibuki: I think political groups may be reorganized under the 
leadership of a party that wins in the next Lower House election. If 
the LDP wins that election, the opposition parties in the Upper 
House could crumble. 
 
(3) Japan-U.S. Joint Committee decides to return Gimbaru to Japan; 
Helipad relocation plan gains momentum 
 
 
TOKYO 00000206  004 OF 008 
 
 
RYUKYU SHIMPO (Page 1) (Full) 
January 25, 2008 
 
Tokyo 
 
Tokyo and Washington agreed at the Japan-U.S. Joint Committee 
meeting yesterday on complete return of the U.S. military's Gimbaru 
training area in Kin Town, as is specified in the SACO (Special 
Action Committee on Okinawa) final report. It covers an area of 
approximately 60 hectares. The helipad will be moved to the Blue 
Beach training area and the mud removing and firefighting training 
facilities to the south side of Camp Hansen. The Ministry of Defense 
(MOD) will design the new facilities, including the helipad, and 
start construction after the Japan-U.S. Joint Committee reached an 
agreement on implementing the plan. The start of construction is 
undecided. 
 
The new felicities will be designed in the future. The helipad on 
the Gimbaru training area is a 30 m by 30 m square. MOD explained to 
local municipalities that (1) no new facilities would be built on 
the Blue Beach training area, although the existing facilities would 
be improved, (2) it would be a simple, removable facility using 
landing mats, and (3) it would be 1.6 km away from the residential 
areas. 
 
The mud removing facility is a pool-shared facility to remove mud 
and dirt from U.S. military vehicles. The firefighting training 
facility is a building where U.S. military fighters conduct drills 
by actually setting things on fire. 
 
The return of the Gimbaru training area has been delayed due to Kin 
Town's opposition to the Blue Beach relocation plan. Kin Town Mayor 
Takeshi Gibu officially accepted the relocation in June 2007, citing 
his plan to push ahead with a vacated land utilization program and 
other factors. 
 
Comment by Kin Town Mayor Takeshi Gibu: I will make utmost efforts 
to advance the vacated land utilization plan as the pump-priming 
measure. 
 
(4) 2008 regular Diet session: 
Provisional-rate-is-for-the-sake-of-ecology argument; LDP - 
"Abolition will increase CO2 emissions; DPJ - "LDP is deceiving tax 
payers" 
 
MAINICHI (Page 5) (Full) 
January 25, 2008 
 
As grounds for their insistence to retain the provisional rate of 
taxation on gasoline, leaders of the government and the ruling 
parties are underscoring that it has an aspect of being a measure to 
combat climate change. Their argument is that if bills related to an 
amendment to the tax code fail to obtain Diet approval by the end of 
March, when the provisional tax rate expires, gasoline prices would 
drop 25 yen per litter, encouraging the use of cars, which would 
increase carbon dioxide (CO2) emissions. They want to use the global 
environment issue as primary justification, with this July's Lake 
Toya Summit in Hokkaido close at hand. However, the opposition camp 
is reacting sharply against the ruling camp's stance, with one 
saying, "They are mixing up different issues. 
 
In opposition to the Democratic Party of Japan's (DPJ or Minshuto) 
 
TOKYO 00000206  005 OF 008 
 
 
call for scrapping the provisional gasoline tax rate, the government 
and the ruling parties on Jan. 15 switched the focus of argument, 
asserting that they are opposed to lowering gasoline prices for the 
sake of the global environment." Fukuda raised a question during a 
press conference: "Given environmental issues, it is questionable 
whether just saying cheaper gas prices are better will do." A number 
of government and ruling party officials made statements playing up 
the need to retain the provisional tax rate, intertwined with the 
Lake Toya Summit. Chief Cabinet Secretary Nobutaka Machimura said, 
"If Japan lowers gasoline prices at a time when the G-8 summit is 
close at hand, would the international community view it as 
seriously tacking the environmental issue?" 
 
This argument of the government is based on the estimate made in 
October last year by the National Institute for Environmental 
Studies, an independent administrative agency. It estimated that if 
the original tax rates on gasoline and light oil were reinstated, 
CO2 emissions would annually increase about 8 million tons in the 
2008-2012 period, making it even more difficult for Japan to achieve 
the goal set under the Kyoto Protocol. 
 
The government is also insisting that Japan's gasoline prices are 
cheaper than those in other advanced countries. The share of the tax 
in gasoline prices is approximately 40 PERCENT , while the rate is 
over 60 PERCENT  in Britain and Germany.  As such, the government 
insists that though prices have gone up due to soaring crude oil 
prices, the rise is still within the acceptable scope. 
 
The opposition camp is opposing the government's and the ruling 
camp's strategy of dealing with public opinion using the global 
environment as justification. 
 
Deputy DPJ President Naoto Kan during a press conference yesterday 
said, "If the government characterizes the provisional gas tax rate 
as an environment-related tax, it should abolish special road tax 
revenues. It should instead propose a tax that will do good for the 
environment. Otherwise, their argument is inconsistent." He thus 
rebutted, saying that as long as the government wants to give an 
environmental significance to the provisional tax rate, it should 
establish an environmental tax. Motohisa Furukawa of the DPJ at a 
Lower House plenary session pursued the prime minister, "Switching 
the purpose of the provisional tax rate from road construction to 
environment protection without revising the relevant law is 
tantamount to deceiving tax payers." 
 
There is an argument from within the LDP calling for an 
environmental tax. However, the DPJ deems it extremely difficult to 
introduce that tax in fiscal 2008. 
 
(5) Government to boost trade insurance for resource development to 
one trillion yen 
 
NIKKEI (Top Play) (Full) 
January 24, 2008 
 
The government has decided to boost the amount of trade insurance it 
underwrites for natural resource development to one trillion yen. 
This figure is more than three times larger than the current level. 
The government aims to curb surging oil prices by promoting oil 
field development. The government initially envisioned that the 
trade insurance would cover projects of natural resource development 
by Japanese firms, but it will allow insurance to be bought on 
 
TOKYO 00000206  006 OF 008 
 
 
projects led by foreign firms. It will call on countries concerned 
to buy insurance and will expand the scope of projects eligible for 
the trade insurance by the end of this month if everything goes 
smoothly. 
 
Nippon Export and Investment Insurance, an independent 
administrative agency, provide coverage on resource development 
projects that involve Japanese companies. If a project is stopped or 
suspended due to terrorism or a natural disaster, the insurance 
covers losses incurred by banks, trading houses and other firms that 
invested in or provided loans for the project. The insurance also 
covers cases in which shares are reduced as a result of a takeover 
by the government of the resource-producing nation. Premiums for 
this type of insurance are 50 PERCENT  to 70 PERCENT  lower than 
those for ordinary trade insurance, given that the insurance is 
intended to support resource development. For instance, more than 
one billion yen in insurance premiums is needed on a loan of 100 
billion yen, but the amount is only 300 to 500 million yen in the 
case of this insurance. 
 
This trade insurance was launched in April, 2007, set off by the 
Russian government's intervention in the Sakhalin 2 oil and natural 
gas development project, in which Japanese firms held stakes. The 
insurance was used on loans offered by Mizuho Corporate Bank and 
others for a uranium mining project in Kazakhstan. 
 
Behind the sharp rise in crude oil prices are such factors as an 
increase in demand, the inflow of speculative funds, and a decline 
in spare productive capability due to a lack of investment when oil 
prices remained low. The Ministry of Economy, Trade and Industry 
expects that Japan will increase its oil production capabilities in 
the Gulf of Guinea in Africa, in which there reportedly is an 
abundance of oil, and in the Middle East by making full use of the 
trade insurance, as part of efforts to bring down oil prices. 
 
The new type of trade insurance is also available for projects to 
develop rare metals, indispensable in producing high-tech devices, 
such as cellular phones, in Brazil and other Latin American 
countries, Southeast Asia, and the Republican of South Africa. 
Further, the government wants the insurance to be used on projects 
to develop natural gas in the Middle East and Vietnam, as well as 
uranium in Central Asia. 
 
The government will also allow the insurance to be bought on 
projects led by foreign firms but if Japanese companies are involved 
and if some output will be exported to Japan. 
 
A sharp increase in insurance payments in the Gulf War worsened the 
financial conditions of the trade insurance business. But insurance 
payments began to decrease in the mid-1990s, increasing collected 
money. Its balance has been shifted into the black. The government 
judges that although resource development is at a high risk, there 
is some strength to expand the scope of projects eligible for trade 
insurance. 
 
METI Minister Akira Amari will announce the policy of expansion at a 
conference of oil consumer countries to be held in Davos, 
Switzerland, around Jan. 25. Participating in the conference will be 
U.S. Energy Secretary Sam Bodman, British Secretary of State for 
Business Enterprise and Regulatory Reform John Hutton, EU Energy 
Commissioner Andris Piebalgs, and International Energy Agency chief 
Nobuo Tanaka. Amari is expected to emphasize that the new type of 
 
TOKYO 00000206  007 OF 008 
 
 
insurance will be available for foreign firms. 
 
(6) Rengo, Keidanren leaders start discussion on spring labor 
offensive; Fierce battle on wage increase 
 
SANKEI (Page 2) (Full) 
January 24, 2008 
 
Japanese Business Federation (Nippon Keidanren) Chairman Fujio 
Mitarai and Japan Trade Union Confederation (Rengo) chairman 
Tsuyoshi Takagi yesterday held their first meeting this year at the 
 
SIPDIS 
Keidanren Hall in Otemachi, Tokyo. With the meeting, 
labor-management negotiations in the annual labor offensive were in 
effect launched. Although the unions are calling for a distribution 
of profits to help family finances because of good corporate 
performances, management has toughed its position due to growing 
concern about downward adjustments in operating performances owing 
to the stronger yen and falling stock prices. A tug-of-war over 
whether to raise wages will likely intensify between labor and 
management. 
 
At the beginning of the meeting, Takagi opened with this salvo: "In 
an attempt to boost consumer spending, which is the axis of the 
economy, pay raises are necessary." He demanded a rise in wages by 
playing up the present serious situation. He told Mitarai: "It is 
necessary for the management to feel responsibility for the issue of 
10 million non-regular employees having an annual income of less 
than 2 million yen. 
 
Mitarai, however, said: "The U.S. subprime mortgage crisis has 
escalated and affected stock market prices that are now low. We 
cannot be optimistic about the situation." He did not deny that an 
expansion of consumer spending was important. He underscored the 
impact made by the changing internal and external economic 
situations on business results. 
 
Ahead of this year's spring wage offensive, Keidanren called for 
giving consideration to family budgets in a report by its 
management-labor policy panel. The organization shifted its 
position, taking a flexible stance of allowing value-added companies 
with positive earnings to raise wages. The reason for the change is 
that although corporate performances are certain to post record 
profits for five years in a row, the lack of allocation of profits 
to households has impeded economic recovery. 
 
Labor, buoyed up by a long-absent tail wind, will not budge from its 
hard-line stance. The Japan Federation of Basic Industry Workers' 
Unions, which is organized by the Japan Federation of Steel Workers' 
Unions and Japan Confederation of Shipbuilding and Engineering 
Unions, is seeking a 3,000 yen monthly pay raise per worker. The 
Japanese Electrical Electric and Information Union has called for a 
wage increase of more than 2,000 yen, and the Confederation of Japan 
Automobile Workers' Unions wants an increase of at least 1,000 yen. 
The Federation of All Toyota Workers' Unions will demand a pay raise 
of more than 1,000 yen in this year's spring wage round for the 
first time in seven years. 
 
Keidanren, which assumes the offensive, has sought to constrain the 
labor union side's strategy. Management-Labor Policy Committee 
Chairman Takao Kusakari said: "This is not the time for raising 
wages equally." Toyota Motors Chairman Fujio Cho commented: "Raising 
wages has now become very difficult. It will not be that easy." 
 
TOKYO 00000206  008 OF 008 
 
 
Seven & i Holdings Co. Chairman Toshifumi Suzuki said: "We are not 
in a position to raise wages since consumer spending has been 
hovering at a low level. The recent sharp appreciation of the yen 
has thrown business managers into confusion prior to the March 
closing of annual accounts." 
 
Toshihiro Nagahama, chief economist of the Dai-Ichi Life Research 
Institute, pointed out: 
 
"Electrical machinery and auto industries, which lead the spring 
wage offensive, are most significantly affected by the strong yen. 
So this spring's negotiations will be carried out under severe 
circumstances." 
 
He said: "It is expected that the level of pay raises this spring 
will be lower than last year's 1.87 PERCENT ," depending on the 
impact of falling stock prices and rising exchange rates. 
 
Wage bargaining is not the only issue for the annual 
labor-management talks. Rengo demands this year the improvement of 
labor conditions for dispatched workers and part-timers, as well as 
an overtime pay increase in order to correct the problem of full 
timers working long hours. 
 
Keidanren, however, has insisted that a raise in the minimum wage 
and overtime pay will decrease job opportunities. It has insisted on 
the need to introduce a labor system that prioritizes the work-life 
balance by introducing various ways of working. 
 
The labor unions will present their requests to their companies 
before the end of February. After the unions receive replies in 
mid-March, labor-management negotiations will continue. However, how 
pay raise negotiations will turn out remains a cloudy issue. 
 
SCHIEFFER