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RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHGV/USMISSION GENEVA 3422

C O N F I D E N T I A L SECTION 01 OF 03 TOKYO 002951 
 
SIPDIS 
 
STATE FOR EAP/J AND EAP/EP AND AMBASSADOR HASLACH 
STATE PASS USTR FOR AUSTR CUTLER AND AUSTR WEISEL 
 
E.O. 12958: DECL: 10/17/2018 
TAGS: ETRD EAGR ECON APEC JP
SUBJECT: AUSTR CUTLER DISCUSSES BILATERAL TRADE AND 
REGIONAL ARCHITECTURE WITH JAPANESE COUNTERPARTS 
 
Classified By: Ambassador J. Thomas Schieffer for reasons 1.4 (b), (d) 
 
¶1.  (C) Summary:  While agreeing on the importance of APEC 
and on the Free Trade Area of the Asia-Pacific approach as a 
long-term vision for achieving trade and investment 
liberalization through the Asia-Pacific region, Foreign and 
Trade Ministry interlocutors expressed differing versions to 
visiting AUSTR Wendy Cutler on how Japan and the United 
States can most effectively achieve this goal.  On bilateral 
beef trade, Agriculture Ministry officials continued to 
express opposition to full market opening, arguing for a 
30-month reopening for the time being.  AUSTR Cutler also 
emphasized the importance of Japan re-starting tenders for 
rice imports, although her counterparts could not offer a 
definitive timeline for when tendering would resume.  Her 
Foreign and Trade Ministry counterparts discussed the need to 
continue to strengthen bilateral economic and trade relations 
under a new U.S. administration, including by ensuring the 
U.S.-Japan Regulatory Reform Initiative (or its successor) 
remains a key component of our engagement.  End summary. 
 
¶2.  (SBU) During her October 13-14 visit to Tokyo, Assistant 
U.S. Trade Representative for Japan, Korea, and APEC Affairs 
Wendy Cutler raised bilateral and regional issues with 
Ministry of Foreign Affairs (MOFA) Director General for 
Economic Affairs Yoichi Otabe, Ministry of Agriculture, 
Forestry, and Fisheries (MAFF) Director General for 
International Affairs Kaoru Yoshimura, as well as Vice 
Minister Hidenori Murakami, Ministry of Economy, Trade, and 
Industry (METI) Director General for Trade Policy Hideichi 
Okada, and MOFA Deputy Vice Minister Chikao Kawai.  She also 
met with the Board of Directors of the American Chamber of 
Commerce in Japan. 
 
APEC 
---- 
 
¶3.  (C) AUSTR Cutler engaged MOFA's Otabe and METI's Okada on 
how to set the stage more effectively to make Japan's APEC 
host year in 2010 and the U.S. host year in 2011 as fruitful 
as possible.  Both agreed with Cutler's view that an 
excessive focus placed by Japan on the achievement of APEC's 
Bogor Goals by developed countries before 2010 would sap the 
ability to use 2010 to move forward on future-oriented work, 
like the Free Trade Area of the Asia-Pacific (FTAAP).  Both 
also concurred with Cutler on the importance of carefully 
coordinating bilaterally as we work with other APEC economies 
in order to be able to set a forward looking agenda for 2010 
and 2011. 
 
Regional Economic Integration 
----------------------------- 
 
¶4.  (C) Responding to questions on METI's vision for 
Asia-Pacific integration, Okada noted a U.S. presence in Asia 
is necessary, but Japan will continue to engage its trading 
partners in regional fora such as ASEAN plus 3 and ASEAN plus 
6 that do not include the United States.  At the same time, 
he tried to assure AUSTR Cutler that METI Minister Nikai does 
not intend to exclude the U.S. from regional economic and 
trade initiatives.  There can be no successful regional 
economic integration without the United States, he stated. 
 
Trans-Pacific Strategic Partnership FTA 
--------------------------------------- 
 
¶5.  (C) Saying he did not fully understand how the 
Trans-Pacific Strategic Partnership free trade agreement (or 
P-4) will benefit the United States, MOFA's Otabe 
acknowledged broader participation by additional countries 
might facilitate more meaningful regional trade 
liberalization.  METI's Okada said joining the P-4 was the 
"right step" for the United States.  However, both Otabe and 
Okada argued Japan is not ready for the P-4, but will 
continue its discussions with the U.S. about possible future 
participation.  MAFF's Yoshimura said Japan's agriculture 
industry in particular is not interested in a free trade 
agreement with New Zealand.  Otabe said the GOJ prefers to 
work with the USG to develop a high standard FTAAP and sees 
 
TOKYO 00002951  002 OF 003 
 
 
the FTAAP as a better vehicle than the P-4 for achieving 
regional economic integration.  He also said Japan would be 
in a better position to take high-level decisions on trade 
issues in 2010, when it hosts APEC and the Primer Minister's 
Office focuses on these issues. 
 
U.S. Beef 
--------- 
 
¶6.  (C) Emphasizing the safety of U.S. beef and the strong 
concern that continues to exist about Japan's reluctance to 
adopt international standards for beef trade, AUSTR Cutler 
stressed to her counterparts the need fully to resolve the 
issue.  She added that Ambassador Schwab will soon be in 
touch with Agriculture Minister Ishiba to seek agreement on 
basic principles under which we can move forward with 
solutions to this issue.  She stressed the United States 
continues to look to Japan to agree on a concrete timeline 
for further opening its market in a manner that will lead to 
consistency with international (OIE) standards, and pointed 
to the U.S. agreement with Korea on beef as a model for how 
we can achieve this goal. 
 
¶7.  (C) Reflecting the high degree of incrementalism 
infecting Tokyo on trade issues in recent months as Japan's 
political situation evolves, visiting AUSTR Cutler's 
counterparts failed to move beyond previous positions about 
how the beef trade issue can be solved.  MAFF Vice Minister 
Murakami conceded resolution of the U.S. beef issue will be 
"very difficult" given differences of approach on both sides. 
 Both Otabe and Yomishura asserted lingering doubts about the 
safety of U.S. beef warrants a slower and more measured 
approach by the GOJ.  Yomishura cited research by Japanese 
scientists that claims prions (infectious agents for BSE) 
might exist in the neural network outside the spinal cord. 
AgMinCouns said he was unaware of this research, but noted if 
confirmed, this discovery will have implications for Japan's 
own beef industry, which has suffered higher rates of BSE 
infection in its cattle population.  AUSTR Cutler expressed 
surprise the GOJ still questions the safety of U.S. beef and 
noted she has been told repeatedly in private conversations 
Japan's reluctance to reopen fully its market to U.S. beef is 
motivated by political considerations, not scientific 
concerns. 
 
Rice Tenders 
------------ 
 
¶8.  (C) Director General Yoshimura claimed MAFF stopped rice 
tenders in the wake of Japan's incident rice scandal in order 
to buy the government time to restore consumer confidence. 
He would not commit to a date by which tenders will resume, 
but assured AUSTR Cutler every effort would be made to 
restart the tender process as quickly as possible.  MOFA's 
Otabe speculated rice tenders will resume in December.  AUSTR 
Cutler said U.S. rice is safe and already tested repeatedly 
by Japan, and has not been implicated in the scandal.  She 
expressed concern further delays in a resumption of rice 
tenders made it increasingly difficult for the USG to quietly 
engage the GOJ on this issue.  Otabe said MOFA is working 
with MAFF to resolve the issue and will push for productive 
discussions in Geneva at the WTO.  In particular, Japan will 
consider how best to use WTO preferential treatment 
provisions to "make up" for the delayed start to minimum 
access (MMA) rice tenders for Japan Fiscal Year (JFY) 2008, 
much as it had done earlier this year to rectify a shortfall 
of tenders in JFY 2007 (eight tenders in 2007 compared to 
twice per month as dictated under the terms of the MMA). 
 
U.S.-Japan Relations:  Future Initiatives 
----------------------------------------- 
 
¶9.  (C) Otabe said MOFA and METI have established a study 
group to develop a set of recommendations for how the next 
U.S. administration and Japan should cooperate on a range of 
bilateral and multilateral issues.  He has included former 
METI and MOF officials as a means to better coordinate with 
other Ministries on his work.  Central to these 
recommendations is the role the ongoing Regulatory Reform 
 
TOKYO 00002951  003 OF 003 
 
 
Initiative should play as a key component of the U.S.-Japan 
economic and trade relationship, as well as the Trade Forum, 
which he believes should focus more on exchanging views and 
information on our respective trade initiatives.  Both 
countries also need to develop and coordinate a common 
strategy for engaging other countries in the region such as 
China, India, and possibly Russia.  AUSTR Cutler suggested 
the U.S. and Japan identify discreet issues for 
collaboration, where both countries can set cutting edge 
standards and establish models for other economies to follow. 
 
¶10.  (U) AUSTR Cutler cleared this message subsequent to her 
departure from post. 
SCHIEFFER