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UNCLAS SECTION 01 OF 13 TOKYO 000656 
 
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 03/12/08 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule (Nikkei) 
 
Child-pornography issue: 
4) Ambassador Schieffer in meeting with Justice Minister Hatoyama 
seeks ban on simple possession of child pornography  (Mainichi) 
5) Japan UNICEF makes appeal for elimination of child pornography 
(Mainichi) 
 
Defense and security affairs: 
6) Defense Minister Ishiba denies saying he favors revising SOFA and 
security treaty  (Nikkei) 
7) Foreign Minister Koumura tells Okinawa governor that revising the 
SOFA would be difficult  (Tokyo Shimbun) 
8) Fourteen governors of prefectures housing U.S. bases ask 
government to revise the SOFA  (Sankei) 
 
Political agenda: 
9) Diet to return to normal deliberations tomorrow, but no prospect 
in sight for adopting the tax-related bills in the Upper House 
(Yomiuri) 
10) DPJ-led Upper House today to reject Muto as candidate for Bank 
of Japan governor  (Mainichi) 
 
11) Muto testifies in Diet hearings on qualifications to be BOJ 
governor, but opposition shows no sign of softening its stand 
rejecting his candidacy  (Sankei) 
12) Signs within the DPJ that some members are wavering in their 
hard-line stand against Muto as BOJ governor  (Asahi) 
13) Liberal Democratic Party (LDP) seeks to counter DPJ drive to 
force Diet dissolution in April by statements on the Lower House 
serving a full term  (Tokyo Shimbun) 
14) Former Prime Minister Koizumi and LDP election chair Koga agree 
that the next Lower House election should be next year after the G8 
summit  (Tokyo Shimbun) 
 
Fukuda in action: 
15) Prime Minister Fukuda orders front loading part of his 
administration's new growth strategy  (Asahi) 
16) Fukuda makes a 40-minute pitch to top business leader on the 
need to boost employee wages to settle annual management-labor 
negotiations  (Tokyo Shimbun) 
17) Fukuda in telephone to Russian president-elect discusses 
northern territories problem  (Tokyo Shimbun) 
 
Trade and economic issues: 
18) Senior Chinese official admits that Japan has a legally good 
stance on gas-field development in E. China Sea  (Sankei) 
19) IWC mulling proposal to allow Japan coastal whaling, with some 
members conditioning that to ruling out waters near Antarctica 
(Sankei) 
20) Cabinet adopts amendments to the Anti-Monopoly Act that would 
toughen bid-rigging penalties for leading companies  (Mainichi) 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
 
TOKYO 00000656  002 OF 013 
 
 
Kibo module launched to be delivered to International Space Station 
 
Mainichi: 
Selection of BOJ governor: Upper House to vote down government 
nomination of Muto 
 
Yomiuri: 
Upper House to vote down promotion of Deputy BOJ Governor Muto to 
governor at plenary session today; Nomination of Ito as deputy 
governor also to be rejected 
 
Nikkei: 
Central banks of U.S. and four European countries to expand 
provision of funds: FRB to supply 20 trillion yen; Constraining 
financial turmoil eyed 
 
Sankei: 
Gas fields in East China Sea: "Japan would win, if the case were 
brought to a court," senior Chinese government official says 
 
Tokyo Shimbun: 
Talks to transfer ShinGinko Tokyo's business to other banks bog 
down, as 100 billion yen in deposits demanded; 44.7 billion yen to 
sour if bank goes under 
 
Akahata: 
Tokyo governor responsible for failure of ShinGinko Tokyo: Japanese 
Communist Party calls for ending capital increase worth 40 billion 
yen 
 
2) EDITORIALS 
 
Asahi: 
(1) Selection of new BOJ governor: DPJ's reason for opposing 
promotion of Muto is incomprehensible 
(2) ShinGinko Tokyo: Governor Ishihara also responsible 
 
Mainichi: 
(1) Selection of new GOJ governor: DPJ allowed to abstain from 
voting 
(2) Launch of space laboratory Kibo should be made opportunity to 
reshape Japan's manned flight strategy 
 
Yomiuri: 
(1) Kibo: A Japanese hub in space 
(2) ShinGinko Tokyo: Are only former management personnel 
responsible for its failure? 
 
Nikkei: 
(1) DPJ's preordained opposition to promotion of Muto irresponsible 
(2) Space experiments: Produce results 
 
Sankei: 
(1) Selection of new GOJ governor: Do not trigger slump 
(2) Kibo: Hope for Japanese astronaut Doi's success 
 
Tokyo Shimbun: 
(1) Selection of new GOJ governor: Government responsible for quick 
resolution 
(2) Olympic marathon runners: We hope they will inspire us 
 
Akahata: 
 
TOKYO 00000656  003 OF 013 
 
 
(1) Columbian troops cross border to attack Ecuador: Speedy 
reconciliation efforts indicate joint regional power aimed at 
maintaining peace 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, March 11 
 
NIKKEI (Page 2) (Full) 
March 12, 2008 
 
09:00 
Attended a cabinet meeting in the Diet Building. Internal Affairs 
Minister Masuda stayed behind. 
 
09:51 
Met Deputy Chief Cabinet Secretary Futahashi at the Kantei. Followed 
by Special Advisor Ito. Then met Upper House member Kazuya Maruyama. 
 
 
11:02 
Met Chief Cabinet Secretary Machimura. Later, met Chiba University 
of Commerce Professor Haruo Shimada. 
 
11:53 
Met Special Advisor Nakayama. 
 
12:38 
Met Cabinet Special Advisor Okuda. 
 
14:40 
Met Assistant Deputy Chief Cabinet Secretary Saka. 
 
15:01 
Met Deputy Foreign Minister Kono. Followed by Environment Minister 
Kamoshita and Japanese Association of Corporate Executives President 
Masamitsu Sakurai. 
 
16:35 
Met former Secretary General Nakagawa. Followed by Cabinet 
Intelligence Director Mitani. 
 
17:30 
Talked on the phone with Russian President-elect Medvedev. 
 
18:28 
Returned to his official residence. 
 
4) U.S. Ambassador to Japan Schieffer stresses to Justice Minister 
Hatoyama need to ban simple possession 
 
MAINICHI (Page 2) (Full) 
March 12, 2008 
 
Takashi Sakamoto 
 
Justice Minister Kunio Hatoyama yesterday met with U.S. Ambassador 
to Japan J. Thomas Schieffer at the Ministry of Justice and the two 
exchanged views about tightening regulations on child pornography 
that is proliferating on the Internet. 
 
According to an informed source, Schieffer, speaking of Japan and 
 
TOKYO 00000656  004 OF 013 
 
 
Russia, which have not prohibited simple possession of child 
pornography among the Group of Eight countries, insisted: "The only 
way to eliminate child pornography that victimizes children is to 
ban simple possession of such pornography in order to impact the 
market." In response, Hatoyama said: "Personally, I agree with the 
ambassador." 
 
5) Japan Committee for UNICEF launches campaign for elimination of 
child pornography 
 
MAINICHI (Page 2) (Full) 
March 12, 2008 
 
Yumi Isozaki 
 
The Japan Committee for UNICEF yesterday launched a campaign aimed 
at seeking to amend the Law for Punishing Acts Related to Child 
Prostitution and Child Pornography, in an effort to prevent children 
from being exploited for commercial purposes. The campaign calls for 
punishing even simple possession of sexual images and pictures of 
children aged 18 or below, as well as banning cartoon portrayals of 
sexual abuse involving children as "quasi-child pornography." 
Through the campaign, the Japan Committee for UNICEF will gather 
signatures and present them to the government and the Diet. 
 
Participating in the campaign as promoters are 25 individuals from 
nongovernmental organizations (NGOs) that advocate children's rights 
and the academic community. Yahoo and Microsoft are also supportive 
of the campaign. 
 
The current law punishes the possession of child pornography for the 
purpose of selling or offering them, but it does not punish 
individuals who collect child pornography for simple possession. For 
this reason, images of children depicting sexual violence are 
proliferating on the Internet. 
 
Comics, animation, and video games realistically depicting sexual 
poses or sexual abuse of children are not subject to the law on the 
grounds that the individuals depicted do not exist, but the campaign 
calls for treating such depictions as illegal. Furthermore, the 
campaign seeks to prepare a system of providing care for the victims 
and also calls on relevant industries to impose self-restrictions. 
 
Ambassador of the Japan Committee for UNICEP Agnes Chan, a promoter 
of the campaign, met the press in the Diet and said: "Those children 
who were photographed suffer trauma throughout their life. It is 
difficult to reduce the number of victims because of flaws in the 
law. I hope you will sign a petition to help the children." 
Everybody can sign a petition on the Japan Committee for UNICEF's 
website: http://www.unicef.or.jp. 
 
6) Defense Ministry denies Ishiba's SOFA revision remark 
 
NIKKEI (Page 2) (Full) 
March 12, 2008 
 
The Defense Ministry's Press Secretary Takashi Toyota, meeting the 
press yesterday afternoon, denied an alleged remark made by Defense 
Minister Shigeru Ishiba, who was quoted as saying Japan would have 
to hold fundamental discussions, including the Japan-U.S. Security 
Treaty, in connection with the Japan-U.S. Status of Forces Agreement 
that governs legal status for U.S. Forces Japan. "The defense 
 
TOKYO 00000656  005 OF 013 
 
 
minister has never said anything about adopting a certain course of 
action to review the SOFA," Toyota stressed. "He also said nothing 
(about the security pact)," he added. Toyota explained that he had 
checked with Ishiba on the matter. 
 
Kanagawa Gov. Shigefumi Matsuzawa yesterday called at the Defense 
Ministry to propose revising SOFA provisions. After meeting with 
Ishiba, Matsuzawa introduced the remark when he was asked by 
reporters at the Defense Ministry about his meeting with Ishiba. 
"Mr. Matsuzawa quoted Mr. Ishiba, and I have not confirmed Mr. 
Ishiba had said so," Chief Cabinet Secretary Nobutaka Machimura told 
a press conference yesterday afternoon. 
 
7) SOFA revision difficult: Koumura 
 
TOKYO SHIMBUN (Page 2) (Full) 
March 12, 2008 
 
Kanagawa Prefecture's Gov. Shigefumi Matsuzawa and Okinawa 
Prefecture's Gov. Hirokazu Nakaima yesterday met separately with 
Foreign Minister Masahiko Koumura and Defense Minister Shigeru 
Ishiba. In the meetings, Matsuzawa and Nakaima petitioned Koumura 
and Ishiba for a revision of the Japan-U.S. Status of Forces 
Agreement, including the pre-indictment turnover of U.S. military 
suspects to Japanese police. 
 
"It would be very difficult (to revise the SOFA)," Koumura said, 
citing a balance with other countries that have entered into a 
similar accord with the United States. 
 
Ishiba also showed a cautious stance, saying, "The government's 
policy is to respond by improving its implementation." Ishiba noted 
that the ruling Liberal Democratic Party's lawmakers have yet to 
hold full-fledged discussions on the SOFA. "Someday," Ishiba said, 
"when I'm back in the party, then I'd like to discuss the matter 
well." 
 
8) Base-hosting governors call for SOFA revision 
 
SANKEI (Page 5) (Full) 
March 12, 2008 
 
A group of governors representing 14 prefectures hosting U.S. 
military bases in Japan called yesterday on Defense Minister Shigeru 
Ishiba and Foreign Minister Masahiko Koumura and petitioned them for 
a drastic revision of the Japan-U.S. Status of Forces Agreement in 
the wake of a junior high school girl rape in Okinawa. The governors 
included Kanagawa Gov. Shigefumi Matsuzawa, who heads the group, and 
Okinawa Gov. Hirokazu Nakaima, who is the group's deputy chair. 
 
9) Diet business to return to normal possibly tomorrow; No prospect 
for voting on tax-related bills 
 
YOMIURI (Page 4) (Abridged slightly) 
March 12, 2008 
 
Directors of the House of Councillors Budget Committee are set to 
meet today to discuss a timetable for deliberations on the fiscal 
2008 budget bill. The ruling and opposition camps are likely to 
reach an agreement to hold basic question-and-answer sessions on the 
budget bill for two days from March 13 with the attendance of all 
cabinet ministers, including Prime Minister Fukuda. The Diet, which 
 
TOKYO 00000656  006 OF 013 
 
 
has been stalled since March 3, is now likely to return to normal. 
Nevertheless, because of a delay in deliberations on the budget 
bill, there is no prospect that tax-related bills, including one 
amending the Special Taxation Measures Law to maintain the 
provisional gasoline tax rate, will clear the Diet within the 
current fiscal year. 
 
The ruling bloc rammed the fiscal 2008 budget bill and tax-related 
bills through the House of Representatives on February 20. This 
promoted the Democratic Party of Japan and other opposition parties 
to boycott Upper House deliberations for a week. 
 
The ruling and opposition camps started talks this week for 
normalizing Diet business. The top directors of the LDP and DPJ of 
the Upper House Budget Committee met on March 11 and basically 
agreed to start deliberations on March 13. 
 
Upper House deliberations on tax-related bills customarily begin 
when discussions reach a certain stage after a question-and-answer 
session. The budget bill that passed the Lower House in February 
will automatically be enacted within the current fiscal year without 
a vote in the Upper House in accordance with a constitutional 
provision. Without such a provision, the environment surrounding the 
tax-related bills is becoming severe. 
 
Even if deliberations on the budget bill begin on March 13, chances 
are that the Upper House Financial Affairs Committee will not start 
discussing the bill amending the Special Taxation Measures Law until 
next week or later. The DPJ, which holds the committee's 
chairmanship, is unlikely to respond to calls for convening sessions 
other than regular days -- Tuesdays and Thursdays. Further, with 
March 20 being a national holiday, the committee can meet only twice 
or three times in March. 
 
The DPJ is also expected to demand the amount of time equivalent to 
or more than that spent in the Lower House for deliberating on 
tax-related bills in the Upper House. There is skepticism in the 
ruling camp that they will have to wait until the end of April (when 
inaction in the Upper House can be regarded as de facto rejection 
and the ruling camp can again take a vote in the Lower House under 
the Constitution). 
 
Given the situation, the view is gaining ground in the ruling camp 
that the government and ruling coalition will have to review the 
medium term road construction program and revise the plan to place 
the tax revenues into the general account on the condition of 
maintaining the provisional tax rates. 
 
Meanwhile, the DPJ, which wants to force the prime minister into 
dissolving the Lower House, is determined not to make an easy 
compromise. 
 
10) DPJ formally decides to reject nomination of Muto for BOJ 
governorship today, plans to endorse Shirakawa as deputy governor 
 
MAINICHI (Top Play) (Excerpts) 
March 12, 2008 
 
The Democratic Party of Japan (DPJ) formally decided in its 
executive meeting last evening to oppose the government's 
nominations of Bank of Japan (BOJ) Deputy Governor Toshiro Muto for 
the bank's governorship and of Tokyo University Professor Takatoshi 
 
TOKYO 00000656  007 OF 013 
 
 
Ito for the post of deputy governor. The main opposition party will 
approve the appointment of Kyoto University Professor Masaaki 
Shirakawa as deputy governor. The Japanese Communist Party has 
decided to disapprove the nominations of all three, while the Social 
Democratic Party will make the same decision as the DPJ. The 
opposition bloc, which controls the House of Councillors, will hold 
a plenary session in the Upper House this morning, in which the 
government's nominations of Muto and Ito will be rejected. 
 
The government and the ruling parties indicated a willingness to 
resubmit its Muto proposal. But since some members in the ruling 
camp are calling for caution, a vacancy may be created in the post 
of the BOJ governor after the incumbent governor's term of office 
expires March 19. 
 
Both Diet chambers held their respective Steering Committee meetings 
yesterday and held hearings with Muto, Ito, and Shirakawa on their 
policy stances. Later, question-and-answer sessions were held. After 
the sessions, the DPJ coordinated views. In a meeting of its fiscal 
and financial section, views opposing Muto's promotion were 
presented one after another, with one member saying: "He engaged in 
monetary policymaking for only five years as deputy governor." 
Regarding Ito's nomination, many posed questions about his policy of 
inflation targeting. 
 
Keeping in mind such a situation in the party, DPJ President Ichiro 
Ozawa, Secretary General Yukio Hatoyama, Deputy President Naoto Kan, 
and other executives met yesterday and decided to disapprove of the 
nominations of Muto and Ito. Hatoyama told reporters after the 
meeting, citing that Muto used to be administrative vice finance 
minister: "He is indisputably a man of the Finance Ministry, so it 
will become impossible to ensure the independence of the central 
bank." 
 
Later, the Upper House held an executive meeting of its Steering 
Committee. The opposition camp asserted that a plenary session be 
held on the 12th, but the ruling camp reacted fiercely, calling for 
a session on the 14th. The Upper House Steering Committee decided to 
hold a session on the 12th, with the ruling parties absent. The 
ruling coalition will not hold a Lower House plenary session on the 
12th, so a vote in the Upper House will be taken first. Regarding 
nominations for the post of BOJ governor and deputy governor, 
approval from both chambers of the Diet is needed. If the 
government's nominations are rejected, the process will return to 
the starting point. 
 
11) Muto vs. DPJ over BOJ governorship: Discussion on fiscal and 
monetary policies goes nowhere 
 
SANKEI (Page 9) (Excerpts) 
March 12, 2008 
 
The Diet yesterday held hearings with Bank of Japan (BOJ) Deputy 
Governor Toshiro Muto, whom the government has nominated to be the 
next BOJ governor. Muto emphasized his determination to secure the 
central bank's independence. But the Democratic Party of Japan (DPJ) 
did not back down on its opposition to the promotion of the former 
vice finance minister. No prospects are in sight for the battle 
between the ruling and opposition camps over the selection of a new 
BOJ governor to be resolved. Some are now concerned that if the post 
of governor is left unfilled for some time, monetary policymaking 
may be stalled. 
 
TOKYO 00000656  008 OF 013 
 
 
 
The Democratic Party of Japan (DPJ) and other opposition parties are 
against the government's plan to promote Muto on the grounds that it 
goes against the principle of separating fiscal and monetary policy. 
In response, Muto said in the hearings: "I am determined to secure 
the independence of the BOJ in a steady way." In question-and-answer 
sessions, too, Muto said: "During my five years as deputy governor, 
I worked for the central bank from the standpoint of securing the 
BOJ's independence, without being tied to my previous post." But the 
opposition bloc remained tough. 
 
The ruling and opposition camps were also at loggerheads over the 
issue of the purchase of government bonds. DPJ member Masaharu 
Nakagawa assailed: "It is suspected that the Finance Ministry may be 
using the BOJ to help it issue government bonds." But Muto 
reportedly explained that open-market operations have been carried 
out to increase monetary supply. 
 
Meanwhile, many participants asked about the central bank's policy 
management after the burst of the bubble economy. Former Policy 
Research Council Chairman Yoshito Sengoku pointed out the negative 
effect of the bank's ultra-cheap money policy. Muto replied: "There 
certainly was a problem, but the policy of keeping interest rates 
low and the expansion of public investment were appropriate." He 
thus indicated that they were unavoidable measures to underpin the 
economy and emerge from a serious deflationary trend. But Sengoku 
claimed: "Your explanation is not enough to erase the suspicions." 
 
Meanwhile, the ruling camp has favorably responded to Muto's remarks 
in the hearings. New Komeito member Noritoshi Ishida said: "I am now 
convinced that he will make efforts to keep the BOJ independent." A 
market observer, though, commented, citing growing uncertainty over 
the political situation and limited hours for the hearings: "It is 
impossible to conduct a cool and substantial discussion." 
 
12) DPJ's timetable for a vote on BOJ nominees followed wild path 
 
ASAHI (Page 4) (Excerpts) 
March 12, 2008 
 
The policy course of the Democratic Party of Japan has wavered over 
a timetable for taking a vote in a House of Councillors plenary 
session on nominees for the new Bank of Japan governor and deputy 
governors. The party initially called for a vote on March 12, but it 
gave up on the plan, as many party members expressed reluctance 
about brushing aside the ruling bloc's opposition. But pressed by 
other opposition parties to stick to its original plan, the DPJ 
brought the matter to a vote on March 12 in the end. The leadership 
apparently feared that a delay in disapproving the nominees would 
rock the party. 
 
Four DPJ executives, including President Ozawa, held a meeting at 
11:00 a.m. on March 11. After the meeting, Secretary General Yukio 
Hatoyama said to reporters: "We are planning to hold a plenary 
session tomorrow and set aside some time (to replace nominees) after 
rejecting the government's personnel plan. In that case, the LDP 
would boycott deliberations. We exchanged views that such a 
consequence was not desirable." 
 
The DPJ has been boycotting deliberations in the Upper House 
following the forcible adoption of the budget bill in the Lower 
House. But views are growing in the Upper House that the party 
 
TOKYO 00000656  009 OF 013 
 
 
should swiftly return to deliberations to pursue the government and 
ruling bloc on the road issue and other matters. Resuming 
deliberation on March 12 was temporarily envisioned. However, if the 
party pushed too hard on a timetable for the BOJ personnel issue, 
the ruling bloc would boycott deliberations on the budget, thereby 
forcing the DPJ to face public criticism. In order to avoid such an 
eventuality, the DPJ Upper House proposed postponing the BOJ 
timetable. 
 
13) Senior LDP members say Lower House should be dissolved after 
terms of Lower House members expire; Seek to check DPJ's call for 
Lower House dissolution in April 
 
TOKYO SHIMBUN (Page 2) (Full) 
March 12, 2008 
 
Senior Liberal Democratic Party members have begun to say that the 
House of Representatives should not be dissolved before September 
2009 when the terms of the Lower House members expire. Their aim is 
to seek to contain the main opposition Democratic Party of Japan 
(DPJ or Minshuto), which has taken the offensive to force Prime 
Minister Yasuo Fukuda to dissolve the lower chamber early for a 
general election. 
 
The prevailing view in the LDP has been that it would be desirable 
that the Lower House be dissolved this fall after the end of the G8 
summit at Lake Toya in Hokkaido in July. 
 
However, senior members of the Machimura and Tsushima factions 
reached an agreement in a meeting on the night of March 8 that the 
Lower House should not be dissolved before the terms of the Lower 
House members expire. Election Committee Chairman Makoto Koga and 
Vice Committee Chairman Yoshihide Suga have made similar remarks to 
this effect. 
 
The DPJ has made clear its policy is to force Lower House 
dissolution in April by shaking the government and ruling parties 
with such issues as the appointment of new Bank of Japan governor, 
the provisional tax rates, and the pension-record mess. 
 
In a press conference on March 10, DPJ President Ichiro Ozawa, who 
had denied the possibility of an early Lower House dissolution, 
stated: "We will have a general election before too long." 
 
There is no sign that the Fukuda cabinet will be able to recover its 
popular support. DPJ Deputy President Naoto Kan said: "It will be 
impossible" for the ruling coalition to retain more than two-thirds 
of the Lower House seats, which require for them to override Upper 
House decisions, if the prime minister is forced to dissolve the 
Lower House (in April). There is even the possibility that the 
ruling camp will be lacking a majority in the Lower House and that 
the DPJ will take over the reins of government. 
 
The senor LDP members' remarks come from their desire to show their 
determination that the Lower House will never be dissolved under the 
disadvantageous situation for their party and to weaken the DPJ's 
momentum. 
 
One senior LDP member commented: "We will never allow (Fukuda) to 
dissolve the Lower House after being forced (by the DPJ). We will 
overcome the April crisis at any cost ." 
 
 
TOKYO 00000656  010 OF 013 
 
 
14) Koizumi, Koga, others want Diet dissolution put off until after 
next year's summit 
 
TOKYO SHIMBUN (Page 2) (Full) 
March 12, 2008 
 
Four ruling Liberal Democratic Party heavyweights met at a Tokyo 
restaurant yesterday evening and agreed that the House of 
Representatives should not be dissolved for a general election until 
after next year's Group of Eight (G-8) summit. The four were former 
Prime Minister Junichiro Koizumi, LDP Election Strategy Council 
Chairman Makoto Koga, LDP General Council Chairman Toshihiro Nikai, 
and former LDP Secretary General Tsutomu Takebe. 
 
The House of Representatives' current tenure is up until September 
¶2009. In this light, the four apparently want a general election to 
take place after the lower chamber winds up its current term. 
 
15) Prime Minister Fukuda orders front-loading of part of growth 
strategy 
 
ASAHI (Page 4) (Full) 
March 12, 2008 
 
Prime Minister Fukuda yesterday at an informal meeting of his 
cabinet ordered relevant ministries to implement on a front-loaded 
basis starting in April a portion of the new economic growth 
strategy that will be adopted by the cabinet in June. With the 
currency market unstable and stock prices also falling, the prime 
minister wanted to stop the economy from slowing down any further. 
 
Specific measures for implementing the new growth strategy will be 
compiled this spring by the Economic and Fiscal Policy Council. The 
package then will be included in a set of "big-boned economic 
guidelines" in June. Prime Minister Fukuda expressed his concern 
this way: "with the U.S. economy slowing down and the rising trend 
in crude oil prices, the risk of (the economy) starting to slide is 
becoming greater."  According to Economic and Fiscal Policy Minister 
Ota, the front-loading will consist of three elements: measures to 
strengthen the constitutions of small to medium-sized businesses, 
improving the job environment, and regional revival. 
 
16) In 40-minute monologue, Prime Minister Fukuda desperately asks 
JBF chairman for employee pay raises; Effort to boost his 
administration's popularity? 
 
TOKYO SHIMBUN (Page 2) (Full) 
March 12, 2008 
 
Prime Minister Yasuo Fukuda is now paying close attention to the 
results of this year's annual spring labor-management negotiations, 
which are expected to be reach a climax today. 
 
Positioning the improvement of the daily lives of the people as the 
top priority of his cabinet, the prime minister appears to be 
linking (employee pay raises) to boosting his government's 
popularity. However, the daily lives of the public have increasingly 
become difficult with food prices sharply increasing due to the 
soaring prices of imported grains. Whether the burden on the 
national livelihood can be eased by employee pay hikes is becoming 
an important issue for the Fukuda cabinet. 
 
 
TOKYO 00000656  011 OF 013 
 
 
The Cabinet e-mail magazine, distributed on March 6, started with: 
"I am Yasuo Fukuda, who will share with you the fruits of your 
toil." What he meant was explained as: "Now is time for the 
achievements of (structural) reform to be provided to consumers as 
pay raises." With that, Fukuda pledged to back labor (and not 
management). 
 
On March 6, Fukuda called Business Federation Chairman Fujio Mitarai 
in his office (Kantei) and asked him for employee pay increases. 
 
In the meeting, Mitarai said: "I don't know what outcome will 
emerge." Fukuda then told him: "That's why I am asking you." The 
prime minister reportedly spoke unilaterally for about 40 minutes. 
 
Fukuda told the press on March 10, as well, about the spring labor 
offensive: "I understand individual companies have their views, but 
I want them to make their utmost effort." 
 
Referring to soaring food prices and the continued high-price of 
crude oil, Fukuda said: "Prices have soared. But if employees' wages 
are raised more than the high prices, there will be no problem." 
Whether the management side will come up with the replies as Fukuda 
expected is  unclear. 
 
17) Fukuda holds talks with Medvedev over territorial issue 
 
TOKYO SHIMBUN (Page 2) (Full) 
March 12, 2008 
 
Prime Minister Fukuda talked with Russian President-elect Medvedev 
over the telephone yesterday evening. Referring to the pending issue 
of the Northern Territories, Fukuda told Medvedev: "I want to 
cooperate to raise our two countries' bilateral relationship to a 
higher level. I want to see specific progress for a settlement of 
the territorial issue." 
 
Medvedev responded: "We're ready to continue to talk about a 
difficult issue like a peace treaty, based on various agreements and 
principles accomplished by both countries." 
 
Fukuda also congratulated Medvedev on his victory in the 
presidential election. Medvedev said, "I'm willing to cooperate with 
Japan for a successful G-8 summit (to be held at Lake Toya in 
Hokkaido)." 
 
18) High-ranking Chinese official: Japan will win if bilateral gas 
dispute is taken to court 
 
SANKEI (Top play) (Excerpts) 
March 12, 2008 
 
It was found yesterday that in talks between Japan and China over 
the disputed gas exploration rights in the East China Sea, the 
Japanese side proposed taking the matter to an international court. 
In response, a high-ranking Chinese official effectively admitted 
that the Japanese claim is more reasonable (than China's) under 
international law, saying, "If it is taken to a court, Japan 
probably will win." The official also reportedly strongly rejected 
entering international court procedures, saying: "We cannot let 
Japan win in court." 
 
When Prime Minister Yasuo Fukuda visited China late last year, an 
 
TOKYO 00000656  012 OF 013 
 
 
agreement was reached to aim at settling this issue before a visit 
to Japan by Chinese President Hu Jintao. Bilateral talks have 
stalled since then. Now that it has become clear that China is aware 
of the validity of Japan's claim, Japan cannot make an easy 
compromise for settling the matter speedily. 
 
Tokyo claims that the median line that divides the Japanese and 
Chinese waters in the East China Sea must be recognized as the 
border, while Beijing maintains that Chinese territory extends to 
the Okinawa Trough west of the Okinawa islands. The two sides' 
claims have been wide apart since bilateral talks began in 2004. 
 
19) Idea of allowing coastal whaling on condition that whaling be 
banned in Southern Ocean floated by some antiwhaling countries 
 
SANKEI (Page 2) (Excerpts) 
March 12, 2008 
 
Masato Kimura, London 
 
In the latest midterm conference of the International Whaling 
Commission (IWC) held in London on March 6-8,  a compromise proposal 
calling on Japan to suspend research whaling in the Southern Ocean 
but to allow it to resume coastal whaling for commercial purposes 
was floated, sources revealed yesterday. Reportedly, this proposal 
was informally discussed between pro-whaling and antiwhaling 
countries. The proposal is drawing attention as a measure to break 
the impasse in the IWC talks. The proposal is expected to be 
presented to the upcoming annual meeting of the IWC in Chile slated 
for late May through June. 
 
According to what IWC Secretary Grandy told the Sankei Shimbun 
yesterday, the proposal was presented by the Netherlands and 
Argentina, both antiwhaling nations, during the midterm conference. 
The aim of the midterm conference was to discuss how to normalize 
IWC activities, which have been stalled because of conflict between 
pro-whaling and antiwhaling countries. So the proposal was not a 
formal agenda item for discussion. But pro-whaling countries 
including Japan and antiwhaling countries discussed the proposal 
seriously in intervals between sessions. 
 
A similar compromise proposal came up for discussion in the recent 
International Whaling Symposium held in Tokyo in February. According 
to the British Independent, although the United Kingdom is in the 
van of antiwhaling countries, a British delegate indicated 
understanding toward a resumption of coastal whaling that would lead 
to banning research whaling in the Southern Ocean if a total ban on 
whaling is not expected. 
 
20) Antimonopoly surcharge against bid-riggers: Companies that 
played leading role subject to surcharge 50 PERCENT  higher than 
present level: Amendment to AML adopted at cabinet meeting 
 
MAINICHI (Page 2) (Excerpts) 
March 12, 2008 
 
The government yesterday adopted at a cabinet meeting a bill 
amending the Anti-Monopoly Law (AML) featuring an increase in 
surcharges imposed on companies that engaged in bid-rigging and the 
reinforced protection of small- and medium-sized businesses. Under 
the revised law, administrative surcharges imposed on companies that 
played a leading role in bid-rigging or cartels would be increased 
 
TOKYO 00000656  013 OF 013 
 
 
50 PERCENT  from the current level. The abuse of dominant position, 
meaning leading companies make an undue demand to their 
subcontractors, would also be added as a practice subject to 
administrative surcharges. The government wants to see the amendment 
enacted next spring. 
 
According to the amendment bill, administrative surcharges imposed 
on companies that played a major role in bid-rigging practices or 
other unfair trade practices would be raised from the current 10 
PERCENT  to 15 PERCENT  of sales made from illegal practices, if 
they are major manufacturers. In the meantime, the system of 
reducing administrative surcharges on companies that voluntarily 
admitted to unfair trade practices would be improved. 
 
The abuse of dominant position, misleading representation of 
commercial products, including false or ambiguous labeling, and 
exclusion-type private monopoly, would also be added to the list of 
illegal trading practices subject to administrative surcharges. 
 
Outline of bill amending AML 
 
? 50 PERCENT  increase in administrative surcharges imposed on 
companies that played leading role in bid-rigging from the current 
level 
? Addition of the abuse of dominant position, false labeling and 
exclusion-type private monopoly to the list of unfair business 
practices subject to administrative surcharges 
? Extension of the period of the imposition of administrative 
surcharges from the current three years to five years. 
? Mandatory prior notification when a company acquires stocks of 
another company as is the case for a merger. 
? Thorough revision of the judge system. Measures should be taken 
after consideration within fiscal 2008. 
 
SCHIEFFER