VZCZCXRO0180
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2932/01 2950652
ZNR UUUUU ZZH
R 210652Z OCT 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 8083
INFO RUCPDOC/USDOC WASHDC
RUEHFK/AMCONSUL FUKUOKA 0479
RUEHNAG/AMCONSUL NAGOYA 8531
RUEHNH/AMCONSUL NAHA 2835
RUEHOK/AMCONSUL OSAKA KOBE 4226
RUEHKSO/AMCONSUL SAPPORO 1052

UNCLAS SECTION 01 OF 03 TOKYO 002932 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/J 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EFIN EAGR PREL SENV JA
SUBJECT: Japan Economic Scope for October 20, 2008 
 
SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY. 
 
¶1. (U) This cable contains the Japan Economic Scope for 
October 20, 2008. 
 
Environment and Energy 
---------------------- 
 
¶2. (SBU) Japan And U.K. Sign Statement Of Cooperation on Carbon 
Footprints And Offsets 
 
The Ministry of Environment (MOE) published a Japan-U.K. statement 
of cooperation and exchange of information including methodologies 
to calculate carbon footprints and procedures for domestic carbon 
offsetting schemes.  The October 10 statement adds detail to a May 
ministerial agreement between the MOE and the U.K. Department of 
Environment, Food and Rural Affairs (Defra) on the subject.  Japan 
announced plans to begin a voluntary carbon footprint labeling 
scheme in 2009, possibly to be followed by a mandatory plan. 
¶3. (U) No Radiation Leakage After Fire At Nuclear Power Station 
 
No radioactive leakage, injuries or environmental damage were 
reported following a fire at a waste disposal facility of the Tokai 
Number 2 nuclear power station in Ibaraki the morning of October 10, 
according to operator Japan Atomic Power Co. and local officials. 
Press cited the Nuclear and Industrial Safety Agency as saying the 
smoke came from molten waste material, and the local government as 
saying some waste had spilled on the floor.  The plant is still in 
operation.  MOFA officials covering nuclear safety had no additional 
information on the incident. 
 
Insurance and Investment 
------------------------ 
 
¶4. (SBU) AIG: Interest Among Companies, Worries Among Consumers 
 
AIG's October 3 announcement it will sell Japan subsidiaries Alico, 
AIG Star Life, and AIG Edison to help repay debt obligations to the 
New York Fed continues to generate rumors of potential buyers. 
According to the media, Nippon Life, Tokyo Marine Holdings, Allianz, 
Prudential, and Aflac are showing interest. 
 
Foreign insurers are also suffering collateral damage from the AIG 
bailout, as consumers worry about the financial stability of foreign 
insurers.  Foreign insurers have tried to distance themselves from 
AIG in full-page newspaper advertisements, pointing, for example, to 
strong credit ratings.  Nonetheless, a foreign insurer recently told 
us surrender requests for his company's dollar-denominated products 
were up five to ten times the normal rate. 
 
Food and Agriculture 
-------------------- 
 
¶5. (U) Wheat, Barley Tenders Resume - Can Rice Be Far Behind? 
 
The Ministry of Agriculture (MAFF) announced the restart of wheat 
and barley tenders October 9.  The 6th food Simultaneous Buy and 
Sell (SBS) wheat tender, which MAFF cancelled in September due to 
the "tainted rice" scandal that also implicated the Ministry, was 
held the afternoon of October 10 in Tokyo.  Products up for tender 
included food wheat (25,500 MT), food barley (26,200 MT), and beer 
barley (5,500 MT), the same proportions as were listed in the 
cancelled tender.  MAFF reportedly changed the contract specs to 
require destruction or re-export at the importers' expense if found 
in violation of food safety laws.  MAFF Minister Ishiba said in a 
press conference the relative success of the wheat tender process 
will help MAFF determine when it will resume stalled rice tenders. 
 
¶6. (U) Wheat Prices Continue to Climb 
 
MAFF raised the resale price (aka price paid by millers to MAFF) on 
imported wheat by 10 percent in the first week of October.  MAFF has 
already raised prices three times in the past year and a half, in 
line with its adoption of a more frequent price adjustment 
mechanism.  With the latest increase, the total price hike for 
Japanese wheat importers is 55 percent.  A portion of that price has 
been passed on to consumers, but industry is bearing the brunt of 
the cost hike. 
 
Japan's Foreign Relations 
------------------------- 
 
¶7. (SBU) Indian P.M. to Visit Tokyo--EPA Imminent? (SBU) 
 
 
TOKYO 00002932  002 OF 003 
 
 
Indian Prime Minister Manmohan Singh visits Tokyo October 21-23, 
where he is expected to conclude several economic agreements with PM 
Aso.  The leaders will formally announce a 15 billion yen 
joint-infrastructure fund, spearheaded by the Japan External Trade 
Organization, to modernize the transportation infrastructure between 
New Delhi and Mumbai.  In addition, the prime ministers are expected 
to announce basic tariff-reductions to lay the foundation for an 
Economic Partnership Agreement which press reports indicate may be 
concluded by the end of 2008.  Sticking points in the talks, which 
begun in February 2007, include Indian taxation of Japanese-origin 
auto parts and issues surrounding the importation of Indian generic 
pharmaceuticals.  A senior Ministry of Economy, Trade and Industry 
official reported shortly before Singh's visit the two sides are "90 
percent" of the way toward an agreement. 
 
¶8. (U) Emergency Assistance for Earthquake Disaster in the Kyrgyz 
Republic 
 
The GOJ decided October 7 to provide emergency relief goods 
(including electric generators) equivalent to about 11 million yen 
(about $110,000) to the Government of the Kyrgyz Republic, which 
sustained damage from the recent earthquake. 
 
Politics and Reform 
------------------- 
 
¶9. (U) Government Nominates Bank Of Japan Executive Director As 
Deputy Governor 
 
The government nominated Bank of Japan Executive Director Hirohide 
Yamaguchi to assume a long-vacant Bank of Japan (BOJ) deputy 
governorship October 15.  Bank of Japan appointments require 
approval from both houses of the Diet, and the DPJ's promise to 
assent to the appointment in the DPJ-controlled upper house means 
long-time BOJ staffer Yamaguchi should have a clear path to the 
position.  Yamaguchi's confirmation would close one of the BOJ's two 
vacant Policy Board seats and fill and executive post that has been 
vacant since March. 
 
Trade 
----- 
 
¶10. (SBU) METI Publishes Catch All Trade Controls 
 
The Ministry of Economy, Trade and Industry (METI) recently provided 
a copy of its export controls guidance distributed annually to 
industry representatives.  The guidance focuses on "catch-all" 
controls to help trading companies recognize sales to possible front 
companies.  Catch all controls are rules to prevent common use items 
-- those not normally requiring an export license -- from being used 
by others to manufacture weapons of mass destruction (WMD). 
 
METI officials note the guidance includes elements similar to that 
provided by the USG to U.S. industry such as unusual routes, 
payments, qualities, etc. 
 
Here is an excerpt of METI's Export Control Catch All Controls 
guidelines: 
 
All Japanese exporters must confirm the following items to determine 
an end user's legitimacy or whether there might be some suspicion 
regarding catch all controls. 
 
-- The importer and users or their representatives provide an 
articulate explanation of the use or application of the goods. 
 
-- There is a rational need for the goods considering the users' 
business operation and technology. 
 
-- The location of installation or use is clearly explained. 
 
-- The transportation and installation of the cargo do not require 
unusual or excessive safety measures and treatment. 
 
-- There is no demand for excessive quantities. 
 
-- There is a request for the parts and related system usually 
necessary for the goods. 
 
-- During the transportation, there is no unusual route of 
transportation nor abnormality in packaging or notification. 
 
-- There is no unusually favorable offer in terms of payment, 
conditions and fee. 
 
TOKYO 00002932  003 OF 003 
 
 
 
-- There is no request for excessive confidentiality. 
 
¶11. (SBU) ACTA Talks In Tokyo 
 
Japan hosted the third round of multilateral talks on the 
Anti-Counterfeiting Trade Agreement (ACTA), October 7-10. 
Discussion among representatives of 23 participating countries 
focused on the sections on criminal enforcement and civil 
provisions.  Two factors complicating progress are an apparent 
desire among most participants to avoid commitments that require 
amending existing laws, and questions of European commission vice 
Member State competency, particularly on criminal enforcement 
questions.  Participants also discussed public reactions, with the 
U.S. reporting on public comments received, and the parties agreed 
on the importance of transparency and public outreach at an 
appropriate time.  The EU offered to host the next meeting in 
Brussels in early December or late November.  While there had been a 
desire to conclude the agreement by year's end, participants agreed 
that a high-quality agreement is more important than conclusion this 
year. 
 
SCHIEFFER