VZCZCXRO3272
RR RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #3362/01 3460119
ZNR UUUUU ZZH
R 110119Z DEC 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 9348
INFO RUCPDOC/USDOC WASHDC
RUEHFK/AMCONSUL FUKUOKA 1365
RUEHNAG/AMCONSUL NAGOYA 9351
RUEHNH/AMCONSUL NAHA 3723
RUEHOK/AMCONSUL OSAKA KOBE 5156
RUEHKSO/AMCONSUL SAPPORO 1933

UNCLAS SECTION 01 OF 04 TOKYO 003362 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/J 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EFIN EAGR PREL SENV JA
SUBJECT: Japan Economic Scope for December 8, 2008 
 
SENSITIVE BUT UNCLASSIFIED. PLEASE PROTECT ACCORDINGLY. 
 
¶1. (U) This cable contains the Japan Economic Scope for 
December 8, 2008 
 
Business 
-------- 
 
¶2. (U) American and Kyushu Companies to Develop Rapid Vehicle 
Charging Stations 
 
Ener1, a New York based energy storage company, announced a deal 
with Kyushu Electric Power (Kyuden) to develop rapid recharging 
stations for electric vehicles. According to Ener1, Kyuden is 
already developing advanced rapid charging stands for electric 
vehicles and plans to integrate the system with a battery pack from 
Ener1's lithium-ion battery subsidiary, EnerDel.  The two companies 
hope to make the first integrated charging station available by 
March 2009.  Once developed, the rapid recharge system will allow 
drivers to recharge up to 80 percent of a vehicle's battery capacity 
in less than 20 minutes.  The ability to recharge lithium-ion 
batteries rapidly is seen as an important step toward the widespread 
adoption of electric vehicles. 
 
¶3. (U) ACCJ Elects New President, Board Members 
 
The ACCJ on December 4 elected Thomas W. Whitson, a KPMG Partner and 
20 year resident of Japan, as President for 2009.  ACCJ re-elected 
as Tokyo Vice Presidents Michael J. Alfant (President and CEO, 
Fusion Systems Japan Co., Ltd.) and William R. Bishop, Jr. 
(Director, Government & Public Affairs, Nippon Becton Dickinson 
Company, Ltd) to join elected incumbent Tokyo Vice Presidents 
Laurence W. Bates (General Counsel, General Electric Japan, Ltd.), 
Kumi Sato (President, Cosmo Public Relations Corporation), and Mark 
¶F. Schwab (Vice President, Pacific, United Airlines, Inc.).  ACCJ 
also re-elected incumbent Treasurer Nasir Majid (Partner, 
International Assignment Solutions, PricewaterhouseCoopers). 
 
In addition, as ACCJ Tokyo Governors, ACCJ elected Andrew Conrad 
(Senior Vice President, Aflac International, Inc.), Bruce J. 
Ellsworth (Director, Government Affairs - Japan, Johnson & Johnson 
Family of Companies), Patricia O'Keefe (Director, USC International 
Offices - Tokyo, University of Southern California), Douglas 
Peterson (Chairman, Representative Director, President and CEO, 
Nikko Citi Holdings Inc.), Jay Ponazecki (Partner, Morrison & 
Foerster LLP), Mitsuyo Teramura (Senior Manager, Government Affairs, 
Federal Express Corporation), and Jim Weisser (President, PBXL), to 
join incumbents Christopher K. Ellis (Representative Director and 
President, Chrysler Japan Co., Ltd.), James Foster (Director, 
Corporate Affairs, Microsoft Japan), Tad Johnson (General Manager, 
P&W Aftermarket Japan KK), John Kakinuki (General Counsel, GE 
Consumer Finance Co., Ltd.), and Nicole W. Piasecki (President, 
Boeing International Corporation). 
 
Environment and Energy 
---------------------- 
 
¶4. (SBU) Japan's Trial Emissions Trading Scheme Yet To Attract 
Participants 
 
No companies have yet joined Japan's new trial domestic emissions 
trading scheme, an official from the Ministry of Environment (MOE) 
Market Mechanism Office told a November 19 international emissions 
trading conference.  The official hopes last-minute applications 
will flood in before the December 12 deadline.  The GOJ has already 
been open to recruiting applications for a month. 
 
At the same conference, International Carbon Action Partnership 
(ICAP) Project Manager Dr. Martin Bergfelder explained the GOJ's 
trial does not qualify for ICAP participation; ICAP includes only 
mandatory cap and trade systems with absolute caps.  Japan's system 
is voluntary and allows intensity targets rather than mandatory 
absolute targets.  He added that an intensity target precludes 
telling if an environmental objective is met.  Asked off line about 
Japan's scheme, told emboff that even a small step could be worth 
taking. 
 
Hosted by the Institute for Global Environmental Studies (IGES), an 
MOE-related think tank, the conference drew 130 attendees from 
industry, international organizations, research institutions and the 
press. 
 
¶5. (U) Merrill Lynch to Withdraw from Japan Electric Power Exchange 
 
 
TOKYO 00003362  002 OF 004 
 
 
 
The Japan Electric Power Exchange, which administers Japan's nascent 
wholesale electric power trade, announced Merrill Lynch will 
withdraw from the exchange in January 2009, according to media 
sources.  Merrill was the first foreign trader to enter the exchange 
in early 2007 in what was then reported as a major step toward 
liberalization of Japan's electricity sector.  While the firm has 
not commented publicly on the reasons for its withdrawal, analysts 
have noted there has been little growth in Japan's wholesale 
electricity market.  The market reportedly provides less than one 
percent of the country's total power consumption, compared to the 
approximately 44% share of the U.S. electricity market held by 
wholesale power marketers (per data from the Energy Information 
Administration). 
 
Food and Agriculture 
-------------------- 
 
¶6. (U) Unapproved Biotech Event (E32) Found in U.S. Corn Shipment 
 
Ministry of Health, Labor, and Welfare (MHLW) informed the Embassy 
November 18 that a shipment of U.S. corn had tested positive for 
Dow's Event 32 (E32).  E32 is not approved in Japan, and MHLW 
currently tests U.S. corn shipments for it.  The MHLW has not made 
any special announcement about the finding, but may do so once 
further test results are known. 
 
Japan is the largest market for U.S. corn, valued at nearly $3 
billion.  Since April, the use of biotech corn for food (starch) has 
increased dramatically.  Cargill and Dow are negotiating disposal of 
this corn lot, about 600 MT.  The finding may make it more 
difficult, however, to argue for an end to MAFF's E-32 testing. 
 
Japan's Foreign Relations 
------------------------- 
 
¶7. (U) GOJ and UN Fund Assistance to Chernobyl-Affected Areas 
 
The GOJ and UN agreed November 18 to extend assistance totaling $2.6 
million to the "Human Security for Individuals and Communities in 
Chernobyl-Affected Areas through Local Information Provision 
(International Chernobyl Research and Information Network)" project. 
 The project is implemented by UNDP, IAEA, WHO and UNICEF, through 
the Trust Fund for Human Security, and will benefit people in 
Ukraine, Belarus, and Russia.  The project is expected to address 
information deficiencies and improve behavioral patterns and 
perceptions of people living in areas contaminated by the Chernobyl 
accident. 
 
¶8. (U) GOJ, UN Fund Program For Children At Risk In Senegal. 
 
The GOJ and the UN agreed November 18 to extend assistance totaling 
$2.6 million through the Trust Fund for Human Security to a project 
entitled "Inter-agency Programme for Improving the Situation of 
Children at Risk in Senegal," to be implemented in Senegal by the 
ILO and UNICEF. The project aims to improve the lives of 
disadvantaged children in the Thies region by: 
 
-- Strengthening communities, local government, religious leaders 
and NGOs through awareness-raising campaigns and training on child 
labor and birth registration; 
 
-- Liberating children from child-labor by providing them with 
informal/formal education, life skills training, vocational training 
and health care services; 
 
-- Supporting families of targeted children through implementing 
income-generating activities; 
 
-- Promoting birth registration through supporting local NGOs and 
Community-based Organizations; and 
 
-- Establishing a community-based child labor monitoring system. 
 
¶9. (U) Group Reviews Climate Change Program Loan to Indonesia 
 
The GOJ extended a loan up to 30.8 billion yen ($308 million) to 
Indonesia, January 2008, to support GOI efforts to address climate 
change issues.  This Climate Change Program Loan is the first case 
based on the Cool Earth Partnership. 
 
Notes were exchanged in August and the Steering Committee met for 
the first time November 14 in Jakarta to review progress under the 
loan.  Participants also discussed enhancing monitoring arrangements 
 
TOKYO 00003362  003 OF 004 
 
 
and other future steps. 
 
¶10. (U) Yen Loan To Peru 
 
The GOJ will provide a Japanese ODA loan of up to 22.13 billion yen 
($221.3 million) to the Government of Peru to implement four 
projects (water supply/sewage systems and electric power projects). 
The two sides exchanged notes on November 22 in Peru. 
 
¶11. (U) Japanese Instructors Support African Peacekeeping 
 
Japan is dispatching instructors as part of Japan's ongoing 
assistance for Peacekeeping Operation (PKO) centers in Egypt and 
Ghana.  They will train African soldiers and civilians engaged in 
peacekeeping operations or humanitarian activities. 
 
-- Two Ground Self-Defense Force officers and the Director of the 
Hiroshima Peace-builder Centers were dispatched as instructors for a 
two-week training program from November 23 at the PKO center in 
Egypt (Cairo Regional Center for Training on Conflict Resolution & 
Peacekeeping in Africa).  The officers will share Self-Defense Force 
experiences in humanitarian and reconstruction assistance in Iraq 
and international emergency relief operations, while the professor 
will focus on the importance of human resource development in the 
field of international peace cooperation. 
 
-- A senior JICA peace-building advisor was dispatched as trainer 
for a two-week November training program in Ghana.  The program is 
aimed at West African government officials on peace-building 
activities from a developmental viewpoint, focusing on controlling 
small arms and light weapons.  Japan has provided assistance for 
these PKO centers to enhance peacekeeping capabilities of African 
countries.  The GOJ will continue to provide not only financial 
assistance but also Japanese experts and specialists. 
 
Trade 
----- 
 
¶12. (U) Japan Reviews Easing Application for Trade Remedies 
 
Japan's trade remedies -- e.g., anti-dumping duties, countervailing 
duties, safeguards -- are under review by a Ministry of Finance 
study group.  The group, consisting of academics interested in trade 
policy and the head of JETRO (Japan External Trade Organization), 
could submit recommendations to the Ministry as early as December. 
 
The focus to date has been how to simplify procedures to apply for 
trade remedies, and a possible mechanism to trigger them.  The 
Ministry has said any changes resulting from the group's 
recommendations will be consistent with WTO rules. 
 
Japan has only initiated a handful of trade remedy cases since 1995, 
while it has been subject to over 100 suits from other countries 
during the same period, according to a media report.  It has been 
suggested that cumbersome, time consuming procedures, relative to 
Japan's trading partners, have discouraged Japanese industry from 
initiating more cases. 
 
Transportation 
-------------- 
 
¶13. (SBU) GOJ Proposing 20% Ownership Cap in Privatized Narita 
Airport 
 
The Ministry of Land, Transport And Infrastructure (MLIT) has 
proposed no single investor, foreign or domestic, be allowed to own 
more than 20 percent of Narita International Airport Corp. (NAA), 
after its expected 2010 IPO.  Under the proposal, the Ministry would 
retain a permanent 33 percent stake in the company for itself.  MLIT 
submitted its proposal to the Cabinet Office Study Group on Airport 
Infrastructure November 27.  MLIT Deputy Director for Metropolitan 
Airports, whose office prepared the proposal, confirmed the 
Ministry's aim is to maintain de-facto control over Narita, due to 
the airport's "public nature", even after ostensible privatization. 
An NAA official told Embassy any decision on investment restrictions 
is up to the government and would be based on security concerns, but 
his personal opinion is all shares should be put on the open market. 
 In contrast, high-level NAA management has stated publicly some 
level of government ownership is appropriate.  Whether MLIT's 
proposed share cap would apply post-facto to already-privatized 
Japan Airport Building Co., which operates passenger terminals at 
Haneda, Tokyo's domestic hub, is not clear.  The study group's final 
report is due before the end of the year. 
 
 
TOKYO 00003362  004 OF 004 
 
 
SCHIEFFER