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O 310917Z JUL 08
FM AMEMBASSY TOKYO
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UNCLAS SECTION 01 OF 02 TOKYO 002109 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EAP/J AND EEB/MTA 
STATE PLEASE PASS USTR WCUTLER, MROHDE, MBEEMAN 
 
E.O. 12958: N/A 
TAGS: ETRD PREL WTRO JA
SUBJECT: JAPANESE PUBLIC REACTION TO WTO TALKS COLLAPSE 
 
Sensitive but unclassified.  Not for Internet. 
 
¶1. (U) Summary:  Japanese media and public reaction to the 
breakdown of WTO talks in Geneva has been mixed. 
Agricultural interests have expressed relief, while realizing 
Japan will be pressed to go further than they would like when 
talks resume.  Business and the GOJ leadership, however, have 
expressed concern and a commitment to continue to work toward 
concluding an agreement, although skeptical a successful 
conclusion is possible this year.  End summary. 
 
-------- 
Overview 
-------- 
 
¶2. (SBU) Japanese print and broadcast media are giving 
considerable attention to news from Geneva on the collapse of 
the WTO talks and we expect debate in industry press to 
continue.  Several Japanese ministers have issued public 
statements, including Prime Minister Fukuda, Ministry of 
Economy, Trade and Industry (METI) Minister Amari, Ministry 
of Agriculture, Forestry and Fisheries (MAFF) Minister 
Wakabayashi, and Chief Cabinet Secretary (CCS) Machimura. 
Overall, and not unexpectedly given longstanding Japanese 
agricultural protectionist tendencies, the reactions are 
mixed. 
 
------------------- 
Government Response 
------------------- 
 
¶3. (U) PM Fukuda said, "It is very regrettable that an accord 
on modalities was not reached at the WTO ministerial meeting, 
despite more than a week of all-out effort by ministers."  He 
also stated that, while prospects of an agreement this year 
have receded, Japan "will seriously consider how to promote 
talks based on achievements in previous negotiations."  The 
PM added that Japan "will continue to make steady efforts 
toward a WTO agreement that would contribute to the healthy 
development of the global economy.  Japan will further 
strengthen its farming sector, which was the subject of 
various discussions in the latest round of negotiations." 
 
¶4. (U) MAFF Minister Wakabayashi sought to moderate the 
relief of the country's domestic agricultural interests by 
warning that Japan would be expected, when talks resume, to 
reduce the range of its sensitive products beyond what it had 
sought.  He also suggested that Japan should seek to increase 
efficiency and food self-sufficiency through measures such as 
consolidating farmland. 
 
¶5. (U) METI Minister Amari said the collapse in the talks 
"deals a severe blow to Japan."  CCS Machimura urged China 
and India to acknowledge their growing influence on, and 
responsibility for, the global economy.  He also reiterated 
Japan's policy that it will pursue bilateral and plurilateral 
agreements to supplement the WTO. 
 
----------------------- 
Private Sector Response 
----------------------- 
 
¶6. (U) Agricultural interests were pleased and relieved. 
Some groups have issued statements, pleased that for the time 
being Japan has avoided liberalization without being blamed 
for the collapse of the talks.  One statement stressed that 
no agreement is better than a bad agreement, and another 
expressed relief that Japan had escaped the "worst kind of 
agreement."  An editorial argued that free trade is out of 
date now as countries are moving to manage commodity flows 
and protect their domestic food supplies.  At the same time, 
two major newspapers emphasized the need for the Japanese 
agricultural sector to reform and improve its competitiveness. 
 
¶7. (SBU) Relief was mitigated, however, by the prospect that 
Japan would be held to commitments, in particular on 
sensitive sectors, going beyond what Japan had sought.  The 
media report Japan had hoped to hold the line at maintaining 
eight percent of tariff lines as sensitive products, but the 
 
TOKYO 00002109  002 OF 002 
 
 
WTO Director General's compromise plan limits such 
designations to only four percent.  The press reported, even 
should Japan manage to defend the ability to classify six 
percent of products as sensitive, this allotment could be 
entirely consumed by rice, wheat and dairy products.  Other 
politically sensitive products requiring tariff 
liberalization would then include: starch, peanuts and 
Japanese konyaku potatoes.  Konyaku potatoes, for example, 
are particularly sensitive to Gunma prefecture, the home 
district of PM Fukuda, former prime ministers Nakasone, 
Obuchi and Fukuda. 
 
¶8. (U) Industry and business interests, on the other hand, 
are expressing concern over the failure and the benefits 
foregone, particularly in developing country markets.  Nikkei 
expressed concern about a resurgence of protectionism, and 
there was general coverage of potentially serious 
implications for Japan's and the global economy.  A 
representative of Japan's largest business association 
Keidanren said, "we are extremely disappointed with the 
result."  He elaborated that even bilateral talks with the 
U.S. and EU could not progress, without agricultural reforms 
resulting from a WTO agreement.  Keidanren has identified 
high European tariffs on both automobiles and electrical 
appliances as examples barriers to Japanese products. 
 
------------------ 
Why and Where Next 
------------------ 
 
¶9. (U) Without overly stressing the point, Japanese media 
report the main reason for the breakdown was the inability to 
resolve differences between the U.S., India and China over 
special safeguard measures.  Some articles relate claims and 
counter-claims with some pieces specifically saying the U.S. 
pressed India on its demand for looser safeguards.  According 
to reports, India and China then retaliated by demanding the 
U.S. cut further domestic agricultural supports.  In this 
context, papers note the U.S. offer to limit domestic 
support, but that India and China wanted still more. 
 
¶10. (U) The Nikkei, noting the rise of developing members and 
the fact countries like India, China and Brazil have become 
more assertive, concludes that there has been a shift in the 
balance of power in the trade community.  One editorial 
suggested that this has been an historic moment signaling a 
decline in U.S. power.  Another source noted, in the future, 
negotiations and the conclusion of agreements will be more 
difficult, and old approaches may no longer work. 
 
¶11. (SBU) An additional consequence articles suggested may be 
renewed efforts to pursue bilateral and plurilateral 
agreements, and diminished expectations of the global trade 
system.  It is a concern in light of recent commodity price 
volatility, and would likely hurt poor countries in 
particular, but that Japan could also be disadvantaged.  The 
Asahi newspaper stressed the need to restart the talks no 
matter how long it takes, and that bilateral FTAs should not 
be seen as a substitute for strengthening the global 
multilateral trading system. 
SCHIEFFER