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UNCLAS SECTION 01 OF 10 TOKYO 002047 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; 
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; 
SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; 
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
 
SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/25/08 
 
Index: 
 
Defense and security affairs: 
1) Defense "fixer" and consultant Akiyama, known for his many U.S. 
connections, arrested for tax evasion  (Tokyo Shimbun) 
2) Former Defense Minister Kyuma denies that any of defense "fixer" 
Akiyama's money flowed to him  (Asahi) 
3) New law planned to protect defense and atomic-power secrets and 
to unify existing system  (Mainichi) 
4) Okinawa Prefectural Assembly asks governor to cancel plan to 
build new facility at Nago City to replace Futenma Air Station 
(Akahata) 
 
Anti-terrorist bill: 
5) Ruling parties skittish about having to take a second Lower House 
vote to override Upper House and pass extension of anti-terrorist 
special measures law  (Tokyo Shimbun) 
6) Komeito's Upper House secretary general: Extension of 
anti-terrorist law should be put off until the regular Diet session 
that starts early next year  (Mainichi) 
 
Political agenda: 
7) Komeito pressing for convening extra session in September 
(Yomiuri) 
8) Komeito's Kitagawa expects end-of-year Diet dissolution, says no 
guarantee a cabinet shuffle will boost Fukuda administration's 
popular support  (Sankei) 
 
9) Prime Minister Fukuda will decide after July 29 on his cabinet 
shuffle  (Mainichi) 
10) Prime Minister is gathering personnel information, with 
expectations in the party that cabinet shuffle could come early next 
week  (Asahi) 
 
Diplomatic agenda: 
11) Fukuda to meet China's President Hu Jintao at the Olympics 
ceremony  (Tokyo Shimbun) 
12) Fact-finding mission to Sudan to study PKO options  (Yomiuri) 
13) Foreign Minister Koumura's Singapore diplomacy: Success in 
"words" spoken but few "deeds" accomplished  (Tokyo Shimbun) 
14) Koumura able to meet his ROK counterpart fleetingly at the 
Singapore conferences; Still no clue to resolving bilateral row over 
latest Takeshima flap  (Nikkei) 
15) WTO farm talks: Japan finding itself increasingly isolated as 
the U.S. and EU make proposal on important items that it finds 
difficult to accept  (Nikkei) 
 
Articles: 
 
1) Defense industry consultant arrested for alleged tax evasion 
 
TOKYO SHIMBUN (Top play) (Abridged) 
July 25, 2008 
 
A Tokyo District Public Prosecutors Office task force yesterday 
arrested Naoki Akiyama, 58, executive director of the Japan-U.S. 
Center for Peace and Cultural Exchange, on suspicion of violating 
the Income Tax Law (tax evasion). Akiyama is suspected of hiding 
approximately 230 million yen in consultancy fees from 
defense-related businesses and trading companies and of evading 
about 74 million yen in tax payments. The task force teamed up with 
National Tax Administration Agency authorities from the Tokyo 
 
TOKYO 00002047  002 OF 010 
 
 
Regional Taxation Bureau and searched the center's office and other 
locations. 
 
The allegations against Akiyama-who is said to be a channel 
connecting Japanese and U.S. defense industries to politicians and 
bureaucrats-came up during prosecutors' investigations into a 
bribery scandal involving former Administrative Vice Defense 
Minister Takemasa Moriya, 63, and defense contractors. Akiyama is 
believed to have used some of the money to buy a luxury car and an 
expensive wristwatch. The task force will investigate the case, 
focusing on whether Akiyama paid defense-related lawmakers. 
 
Commentary: Focus on how far to unveil defense interests 
 
Akiyama is alleged to have had close ties with defense-related 
lawmakers. With his arrest, prosecutors have now come to a key point 
in their probe of defense interests that resulted in exposing 
Moriya's bribery case. 
 
A task force of the Tokyo District Public Prosecutors Office began 
around the spring of last year to secretly investigate suspicions 
over defense procurement, touched off by the internal trouble of 
Yamada Corporation, a defense equipment trader. Prosecutors 
continued investigating Motonobu Miyazaki, a former managing 
director of Yamada Corp., over his golfing with and bribes paid to 
Moriya. 
 
After indicting Moriya, the task force looked into the flow of money 
from Akiyama to defense policy clique lawmakers. Prosecutors 
questioned defense-related business executives. However, the task 
force appears to have failed to track the flow of money. 
 
In that process, Akiyama was found to have failed to declare a 
portion of his income from consultancy fees. 
 
In 2005, Yamada Corp. was only the 39th-largest contractor of the 
Defense Ministry among manufacturers and trading companies. Many 
people probably think the exposed case is the tip of the iceberg. 
 
The focus of investigations from now on is on how far the task force 
can unveil the darkness of defense interests through its probe of 
Akiyama. 
 
2) Akiyama arrested; Kyuma denies inflow of funds into political 
community 
 
ASAHI (Page 4) (Excerpts) 
July 25, 2008 
 
In the wake of the arrest of Japan-U.S. Center for Peace and 
Cultural Exchange executive director Naoki Akiyama, who has served 
as a mediator between the defense industries of Japan and the United 
States, the opposition bloc intends to pursue once again the 
question of defense interests in the extraordinary Diet session in 
the fall. Meanwhile, a senior official of the Defense Ministry, 
which was rocked by a bribery scandal involving a former 
vice-defense minister, said coldly: "There is no direct link between 
Akiyama's arrest on suspicion of tax evasion and our ministry." 
 
Democratic Party of Japan Secretary General Yukio Hatoyama yesterday 
released a statement reading: "I strongly hope that the relationship 
between defense-related companies and lawmakers, the veiled facts 
 
TOKYO 00002047  003 OF 010 
 
 
about defense equipment procurement, and the wasteful spending of 
tax money will be thoroughly uncovered." DPJ Deputy President Naoto 
Kan, too, said in a press conference: "Our stance of seeking 
Akiyama's Diet testimony has not changed. If suspicions deepen, we 
will beef up our efforts to clear up the truth." 
 
Former Defense Minister Fumio Kyuma, who is on friendly terms with 
Akiyama and is also serving as a director of the Japan-U.S. Center 
for Peace and Cultural Exchange, made this comment to the press 
corps in Tokyo: "I don't know the contents of anyone's personal 
income. Mr. Akiyama may or may not have received money, but we 
certainly did not. I didn't receive money, and I don't think any 
other lawmakers received money, either." Kyuma thus indicated that 
funds have not flown into the political community from Akiyama. 
 
Akiyama has wielded significant influence over the Defense Ministry 
and the Foreign Ministry on the strength of his close ties with 
Kyuma and other former defense chiefs. A Japanese diplomat who used 
to take care of Akiyama-led Japanese lawmaker delegations to the 
U.S. at Japan's embassy in the U.S. indicated that the entire 
embassy had treated the delegations very cautiously. 
 
Akiyama reportedly has rapidly lost his influence since prosecutors 
began investigating scandals that resulted in the arrest of former 
Vice Defense Minister Moriya. In early November 2007, shortly after 
a former Yamada Corp. executive was arrested, Akiyama expressed his 
willingness to introduce a former senior U.S. Defense Department 
official to a senior Defense Ministry official, his old friend. The 
former high-ranking official, who was with a U.S. defense consulting 
firm at the time, asked the Defense Ministry official in a meeting 
for advice for winning an order (from the Defense Ministry) for the 
Guam relocation plan. The Defense Ministry official thought Akiyama 
was in the business of connecting people. 
 
3) New law eyed for info security 
 
MAINICHI (Page 2) (Abridged) 
July 25, 2008 
 
The government is considering creating a new law intended to protect 
confidential information pertaining to Japan's national security 
involving defense and atomic energy. There are now several laws to 
punish information leakage and other infractions. However, 
punishment varies with each law. Moreover, their deterrence is not 
sufficient. The government will therefore unify these laws and 
introduce stricter penalties. 
 
A study group of the Ministry of Economy, Trade and Industry will 
shortly release a report, which is expected to suggest the need to 
create an information security law. METI will consult with relevant 
government ministries and agencies, aiming to present a bill to the 
Diet at its ordinary session next year. 
 
The report says leaking information about defense or atomic energy 
could result in seriously affecting national security as it would 
heighten the danger of terrorism. In addition, the report also notes 
that it would cause Japan to lose international trust. Last 
December, a lieutenant commander of the Maritime Self-Defense Force 
was arrested on the charge of violating a law for the protection of 
secrets under an agreement reached between Japan and the United 
States. The MSDF officer is alleged to have stolen confidential data 
about an Aegis-equipment vessel. 
 
TOKYO 00002047  004 OF 010 
 
 
 
4) Okinawa Prefectural Assembly asks governor and other officials to 
withdraw plan to construct new base (at Nago City replacing Futenma 
Air Station) 
 
AKAHATA (Page 3) (Excerpts) 
July 25, 2008 
 
In connection with the resolution opposing the construction of a new 
base at Henoko district of Nago City, passed by the Okinawa 
Prefectural Assembly (presided over by Yoshinobu Takamine) on July 
18 by the full session, the assembly on July 24 presented a formal 
request of Governor Nakaima and other prefectural organizations. 
 
The delegation consisted of representatives of six opposition 
groups, including the Japanese Communist Party. Representatives of 
the ruling parties Liberal Democratic Party and New Komeito, which 
opposed the resolution, did not accompany the delegation. 
 
Delegation head Niisato in his request to Governor Nakaima said: 
"The resolution reflects the will of the people. We would like you 
to go along with the will of the people in order to stop the 
building of a new base that will make the bases more permanent (in 
Okinawa) and destroy the environment." 
 
Nakaima replied: "Although I take the resolution seriously, I would 
like to quickly complete the relocation according to our 
commitment." He repeated his fixed position on the construction of a 
new base. 
 
5) Cautious view on readopting antiterrorism law emerging in ruling 
parties 
 
TOKYO SHIMBUN (Page 2) (Excerpts) 
July 25, 2008 
 
The current refueling law was readopted by the Diet in January this 
year owing to the ruling coalition's efforts during the 
extraordinary session that was convened last September to carry it 
over to the year 2008 in the face of strong resistance from the DPJ. 
Because the law expires on January 15, 2009, coordination is 
underway to adopt a bill extending the legislation in the next 
extraordinary Diet session. 
 
LDP Secretary General Bunmei Ibuki, in a lecture meeting yesterday, 
referred to the revision bill as the top priority in the 
(extraordinary) Diet session. Former LDP Vice President Taku 
Yamasaki, meeting with Prime Minister Fukuda on July 22, advised him 
to convene the next extra Diet session early in consideration of the 
time necessary for readopting the legislation. 
 
Meanwhile, LDP Election Strategy Council Chairman Makoto Koga in a 
speech on July 23 called for caution about deciding on the 
convocation date for the adoption of the legislation by calculating 
backwards. 
 
New Komeito Secretary General Kazuo Kitagawa, in a press conference 
yesterday, sided with Koga, saying: "We should discuss the matter 
thoroughly with the DPJ. If we mention re-adoption, talks will not 
move forward." 
 
Koga and Kitagawa raised objections because they have an early Lower 
 
TOKYO 00002047  005 OF 010 
 
 
House dissolution in mind. 
 
6) Komeito exec proposes putting off antiterror law extension 
 
MAINICHI (Page 5) (Full) 
July 25, 2008 
 
A New Komeito executive, appearing on BS11 Digital's "Inside Out" 
news program yesterday, insisted that the Diet should put off until 
the ordinary session early next year deliberations on the bill 
extending the new Antiterrorism Special Measures Law, which is to 
expire in January. "We-not only in our party but also in the Liberal 
Democratic Party-wonder if we will really have to do this during the 
extraordinary Diet session," said Kentaro Koba, secretary general of 
New Komeito's lawmakers in the House of Councillors. New Komeito 
lawmakers are strongly calling for the ruling coalition's leadership 
to avoid handling the issue of extending the law at this fall's 
extraordinary Diet session, anticipating that the House of 
Representatives could be dissolved for a general election later this 
year or early next year. 
 
7) New Komeito wants next extra Diet session to be convened in late 
September 
 
YOMIURI (Page 4) (Slightly abridged) 
July 25, 2008 
 
The New Komeito, the junior coalition partner of the ruling Liberal 
Democratic Party (LDP), has called for opening the next 
extraordinary Diet session in late September. With an eye on a 
possible dissolution of the House of Representatives early next 
year, the party has judged that a short-term extra session would be 
a good idea. Since many in the LDP favor the convocation of the 
session in late August, coordination is expected to be difficult. 
 
New Komeito Secretary General Kazuo Kitagawa told the press 
yesterday: "LDP Secretary General Bunmei Ibuki and I haven't talked 
about an idea of opening the session in late August." He then said: 
"I understand well" LDP Election Strategy Council Chairman Makoto 
Koga's suggestion to convene the extra session in late September. 
 
The reason for the New Komeito taking such a position is that with 
the next Lower House election in mind, the party does not want to 
give any chance for the Democratic Party of Japan (DPJ) and other 
opposition parties to gain the advantage. 
 
The New Komeito and the religious sect Soka Gakkai, the New 
Komeito's chief backer, have placed priority on next summer's Tokyo 
Metropolitan assembly election. So, the party hopes Prime Minister 
Yasuo Fukuda will dissolve the Lower House early next year. The 
party therefore is worried that an early opening of the extra Diet 
session would have a negative impact on the Lower House election 
because the opposition would start hitting the government and ruling 
coalition for delaying measures to deal with soaring oil prices. 
 
Some observers view that the fact that Junya Yano, a political 
commentator and former New Komeito chairman, has filed a legal 
action for damages against the Soka Gakkai is one reason for the New 
Komeito calling for delaying the extra session. A senior LDP member 
said: "I think the New Komeito does not want the opposition to call 
Mr. Yano to testify as a Diet witness." 
 
 
TOKYO 00002047  006 OF 010 
 
 
The main issue in the extra Diet session is a bill amending the New 
Antiterrorism Special Measures Law designed to extend the Maritime 
Self-Defense Force's refueling mission in the Indian Ocean. In order 
to take an overriding vote in the Lower House, the ruling coalition 
envisions the convocation of the extra session in late August. 
 
8) New Komeito's Kitagawa: There is no guarantee that cabinet 
shuffle will raise cabinet support rates; Hopes for Lower House 
dissolution before year's end 
 
SANKEI (Page 4) (Excerpt) 
July 25, 2008 
 
New Komeito Secretary General Kazuo Kitagawa at a press conference 
in the Diet building stated: "There is no assurance that a cabinet 
shuffle will boost the popularity of the government. This is an 
extremely high-level political decision. The question is how Prime 
Minister Fukuda will make that decision." Many in the New Komeito 
are reluctant about an early cabinet shuffle. So Kitagawa's remark 
reflected the mood in his party. 
 
Asked by reporters about the possibility of a meeting between Fukuda 
and New Komeito leader Akihiro Ota, Kitagawa showed a negative view 
on the possibility of their meeting in this week, saying: "They have 
no plan. I haven't heard anything from Mr. Ota." 
 
Kitagawa also said: 
 
"It will be three years come September since the last Lower House 
election. In some ways, there is nothing strange about not 
dissolving the Lower House at anytime -- even more so, considering 
the present political situation, I have told my party members that 
they should be start getting ready after September because the 
showdown comes next summer (Tokyo assembly election)." 
 
He expressed his hope that the Lower House would be dissolved before 
the end of the year. Referring to an extension of the New 
Antiterrorism Special Measures Law, he took a cautious stance toward 
a revote in the Lower House. He stated: "In order to extend the law, 
the ruling and opposition camps should first discuss the matter well 
so that the public will understand the extension." 
 
9) Prime Minister Fukuda: I will decide on July 29 or later on 
cabinet shuffle 
 
MAINICHI (Page 1) (Full) 
July 25, 2008 
 
Asked by the press about a cabinet shuffle, Prime Minister Yasuo 
Fukuda said last night: 
 
"(A cabinet shuffle) is a blank slate, anyhow. I have yet to consult 
with various persons. I should make a decision after hearing various 
views in the Liberal Democratic Party (LDP) and considering the 
entire situation and policies. I have to also think of Diet 
management." 
 
He indicated in his remarks that he would decide whether to shuffle 
his cabinet or not after July 29, when the government comes up with 
budgetary request guidelines for fiscal 2009, while considering the 
timing of convening the next extraordinary Diet session. 
 
 
TOKYO 00002047  007 OF 010 
 
 
10) Prime minister studying situation, including timing for 
convocation of extra Diet session, for cabinet shuffle; Decision 
possibly next week 
 
ASAHI (Page 4) (Excerpts) 
July 25, 2008 
 
Prime Minister Yasuo Fukuda, admitting last night that he is 
considering a cabinet shuffle, a matter of great concern for many, 
indicated that he would make a final decision in consideration of a 
long-term political timetable, including the timing for convening 
the next extraordinary Diet session. The prime minister revealed 
this view at his official residence. 
 
The prime minister said about a cabinet shuffle: "I think I must 
reach a conclusion after hearing a variety of views and considering 
the overall situation, including policy." He also indicated that has 
not decided on a party-head meeting with New Komeito Representative 
Akihiro Ota. 
 
LDP Secretary General Bunmei Ibuki, attending a lecture meeting 
earlier in the day in Osaka, indicated that the prime minister would 
make a final decision possibly early next week on whether to shuffle 
his cabinet. Ibuki said: "The question is whether the outstanding 
issues should be handled by the current cabinet or by new members. 
Prime Minister Fukuda will make a decision around next week." 
 
About the timing for the convocation of the next extraordinary 
session of the Diet, there still remains a gulf between the LDP 
leadership, which calls for late August, and New Komeito and some 
LDP members, who favor September. 
 
Ibuki renewed his call for late August, saying: "Risk management 
against the worst-case scenario is necessary." Former LDP Secretary 
General Taku Yamasaki in Jakarta yesterday, too, called for an early 
convocation, saying to the press corps: "The prime minister must not 
make the same mistake as last year's management of Diet business. It 
would be disastrous to allow things to run into next year and then 
dissolve the Diet for a general election right after passing an 
extension of the refueling law through a revote in the Lower House. 
The extraordinary Diet session must come to a close in November." 
 
Yamasaki also said: "A budgetary plan itself will become the LDP-New 
Komeito's manifesto (campaign pledge) for the next general election. 
The plan must be compiled in a calm atmosphere. (To do so), the 
political timetable must be arranged in a way to compile the 
budgetary plan after the extraordinary Diet session closes." 
 
11) Japan-China summit meeting during Beijing Olympic ceremony: 
China taking stance of attaching importance to Japan 
 
TOKYO SHIMBUN (Page 1) (Full) 
July 25, 2008 
 
It was learned on July 24 that coordination is underway for Chinese 
President Hu Jintao and Premier Wen Jiabao to separately meet with 
Prime Minister Yasuo Fukuda when he attends the opening ceremony of 
the Beijing Olympic Games on August 8.  China's two top leaders will 
reportedly meet with only a few heads of states as part of their 
Olympic diplomacy to be carried out at the opening ceremony, which 
will bring together world leaders. 
 
 
TOKYO 00002047  008 OF 010 
 
 
According to the same source, a total of 90 chiefs of states and 
prime ministers will attend the ceremony. Hu is expected to 
separately meet with several chief-of-state-class persons, including 
U.S. President Bush. He also plans to meet with Fukuda for about 30 
minutes. This will be their third meeting this year. They will 
likely give an overview of the recently improved Japan-China 
relationship and discuss ways to move it forward. 
 
Amid a growing mood of boycotting the opening ceremony among Western 
countries over the Tibet issue, Fukuda and Bush at an early stage 
expressed their intention to attend the ceremony. There is a strong 
mood in China of paying respect to them as "benefactors." 
 
12) Fact-finding mission to be dispatched to the Sudan for PKO 
survey 
 
YOMIURI (Page 4) (Full) 
July 25, 2008 
 
The government yesterday decided to send a local fact-finding 
mission to the Sudan from July 27 to Aug. 4 to prepare for a 
dispatch of Self-Defense Forces officers to the UNMIS Headquarters 
for peacekeeping operations. The mission will consist of 
approximately 15 officials from the Foreign Ministry, Defense 
Ministry and Cabinet Office. They will visit Khartoum in Sudan where 
the UNMIS Headquarters is located, and question the Sudanese 
government and UNMIS officials about the security situation and 
other matters. 
 
13) Foreign Minister Koumura wraps up trip to Singapore: Produces 
results in words but fails to extract pledge for action on 
abduction, bilateral relations issues 
 
TOKYO SHIMBUN (Page 2) (Full) 
July 25, 2008 
 
Foreign Minister Masahiko Koumura has wrapped up his schedule in 
Singapore, including taking part in the ASEAN (Association of 
Southeast Asian Nations) Regional Forum (ARF) and the foreign 
ministerial of members of the six-party talks on North Korea's 
nuclear program. He exchanged views on bilateral relations with the 
U.S., South Korea and North Korea at those venues. However, he has 
failed to find a breakthrough in the pending issues, remaining 
unable to change pledges into action. 
 
Japan in particular has put a lot of work into getting on base to 
develop relations with North Korea, including the settlement of the 
abductions of Japanese nationals. Foreign Minister Pak Ui Chun at 
the ARF said, "It is good that Japan-North Korea talks have been 
resumed." He has pledged in front of foreign ministers from various 
countries to make efforts to improve bilateral relations in a 
proactive manner. 
 
U.S. Secretary of State Rice at the foreign ministerial on the 23rd 
stressed, "It is necessary for North Korea to take action to reach a 
settlement." 
 
However, despite those statements, Japan and North Korea failed to 
work out a specific schedule for and method of reinvestigation into 
the abduction issue. 
 
August 11 is approaching -- the day when the U.S. removes North 
 
TOKYO 00002047  009 OF 010 
 
 
Korea from its list of state sponsors of terrorism, which has served 
as pressure on that nation. Commenting on the statement by Pak, 
Koumura after the serious of meetings, told reporters, "His 
statement indicated that he wanted to give the impression that talks 
are underway smoothly." He expressed a sense of caution toward 
efforts to improve Japan-North Korea relations moving at the pace of 
North Korea. 
 
Referring to Japan-South Korea relations, which have strained with 
Japan describing the Takeshima Island (Dokdo in Korean), which both 
Japan and South Korea claim, in a teaching manual for the new school 
curriculum guidelines for social studies textbooks for middle 
schools, Koumura underscored to reporters, "We must improve 
relations with South Korea in a cool-headed manner from a broad 
standpoint." 
 
Koumura said that he had a meaningful exchange of views with Foreign 
Affairs and Trade Minister Yu Myung Hwan on the 22nd. However, South 
Korea has not even admitted to the holding of such a meeting, 
highlighting that the issue is so deep-rooted that it cannot be 
settled through a dialogue between the foreign ministers of the two 
countries. 
 
14) No clue for Japan, ROK to repairs relations strained over 
Takeshima issue; Two foreign ministers fleetingly meet in Singapore 
 
NIKKEI (Page 2) (Excerpt) 
July 25, 2008 
 
There is still no way in sight for repairing relations between Japan 
and South Korea strained over the Takeshima Isles (Dokdo in Korean) 
issue. Foreign Minister Masahiko Koumura, who has been visiting 
Singapore in connection with ASEAN-related events, searched for an 
opportunity to meet South Korean Minister of Foreign Affairs and 
Trade Yu Myung-hwan, but they were only able to converse briefly. 
For the time being, there is no prospect in sight for holding a 
meeting of the two foreign ministers. 
 
15) WTO agricultural talks to focus on 4 PERCENT  as proportion of 
key items to all farm products: Japan could find itself isolated 
 
NIKKEI (Page 1) (Full) 
July 25, 2008 
 
It has been learned that European countries and the U.S. at a 
ministerial meeting held in the early hours of July 24 proposed 
limiting the proportion of key farm items that are eligible for 
exceptionally small tariff cuts to all farm products to 4 PERCENT . 
The aim is to press farm-products-exporting emerging countries, 
which are opposing cuts in tariffs on mined and manufactured 
products, to make concessions. The outlook is that the talks will 
move forward with focus on the adoption of 4 PERCENT . There is 
concern that Japan, which has been insisting on 8 PERCENT , might 
find itself isolated. 
 
The creation of rules for cutting tariffs on farm products and mined 
and manufactured products is the topic of discussions at the ongoing 
multilateral trade liberalization talks, joined by 153 countries. A 
cabinet-level meeting of small number of countries, joined by Japan, 
the U.S., the EU, India, China, Brazil and Australia, has been held 
since July 23. With participating countries urged to make an 
ultimate compromise, the talks have entered a key stage of whether 
 
TOKYO 00002047  010 OF 010 
 
 
they can reach an agreement or break down. 
 
In the agricultural area, one of the key negotiation areas, the U.S. 
and the EU have proposed setting the proportion of key items to all 
farm products at 4 PERCENT , the lower limit of the 4 PERCENT -6 
PERCENT  range as stipulated in the chairman's draft proposal. By 
reducing farm items protected with high tariffs, they adopted a 
stance of opening their farm markets to emerging and developing 
countries, which want to aggressively expand exports of farm 
products. 
 
Japan has 1,332 farm products, of which more than 100 PERCENT 
tariffs are imposed on 125 items. If the proportion of key items is 
set at 4 PERCENT , only 53 items, such as rice and sugar, would be 
categorized as key items. Japan's stand had insisted on securing 8 
PERCENT . 
 
The EU had been in line with Japan for the purpose of protecting 
domestic agriculture. However, it has taken farm products exporters' 
stand in order to move the talks forward. Though the U.S., a farm 
product exporter, which had calling for limiting the proportion of 
key items to 1 PERCENT , agreed to adopt 4 PERCENT . 
 
Seven leading countries will again meet on the afternoon of July 24 
and deepen discussions further. The next focus of attention is how 
to reach a compromise on the scope of cuts in tariffs on mined and 
manufactured products, regarding which the chairman's proposal 
allows latitude between 19 PERCENT  and 26 PERCENT . 
 
ZUMWALT