VZCZCXRO6464
OO RUEHFK RUEHGH RUEHKSO RUEHNH
DE RUEHKO #0387/01 0500858
ZNR UUUUU ZZH
O 190858Z FEB 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0923
INFO RUEHBJ/AMEMBASSY BEIJING 7824
RUEHUL/AMEMBASSY SEOUL 3846
RUEHFR/AMEMBASSY PARIS 6427
RUEHFK/AMCONSUL FUKUOKA 2525
RUEHHK/AMCONSUL HONG KONG 6704
RUEHNH/AMCONSUL NAHA 4869
RUEHOK/AMCONSUL OSAKA KOBE 6313
RUEHKSO/AMCONSUL SAPPORO 3076
RUEHGH/AMCONSUL SHANGHAI 0538
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/TREASURY DEPT WASHDC
RHEHAAA/NSC WASHDC

UNCLAS SECTION 01 OF 02 TOKYO 000387 
 
SENSITIVE 
SIPDIS 
 
USTR FOR BEEMAN AND HOLLOWAY 
NSC FOR LOI 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV JA
SUBJECT: AUSTR CUTLER RAISES JAPAN POST INSURANCE WITH FSA, 
MOFA 
 
REF: A. STATE 3451 
     ¶B. TOKYO 176 
     ¶C. TOKYO 295 
     ¶D. TOKYO 335 
 
Summary 
------- 
¶1. (SBU) During a February 18 meeting with Financial Services 
Agency (FSA) officials, Assistant U.S. Trade Representative 
Wendy Cutler conveyed U.S. concerns that Japan Post Insurance 
is preparing to launch a product before it is held to the 
same standards applied to its U.S. competitors.  Supervisory 
Division Deputy Director General Masamichi Kono said Japan 
Post Insurance has not made a formal application.  If it did, 
he continued, the FSA would subject the application to a 
rigorous review, taking into account equal competitive 
conditions and Japan's bilateral and multilateral 
obligations.  In a subsequent conversation, Deputy Foreign 
Minister Yoichi Otabe told Cutler Japan Post Insurance will 
make a product application, but he does not know when.  End 
summary. 
 
Application Pending, Says FSA 
----------------------------- 
 
¶2. (SBU) The U.S. is very concerned about Japan Post 
Insurance's apparent preparations to apply for a new cancer 
insurance product license, Assistant U.S. Trade 
Representative (AUSTR) Wendy Cutler told Financial Services 
Agency (FSA) Supervisory Bureau Deputy Director General 
Masamichi Kono during a February 18 meeting.  A level playing 
field between Japan Post Insurance and its private 
competitors has not yet been achieved, stated Cutler, and 
Japan Post Insurance should not be allowed to introduce new 
or altered products prior to the establishment of equivalent 
conditions of competition. 
 
¶3. (SBU) Noting a recent letter on the issue from Ways and 
Means Committee Chairman Rangel and Ranking Member Camp, 
AUSTR Cutler stated a new product, coming so soon in the 
postal privatization process, could quickly be politicized. 
With a new administration in Washington, now is not the time 
for an insurance dispute, she continued, as it could 
interfere with useful bilateral cooperation in other areas, 
including our responses to ongoing financial turmoil. 
 
¶4. (SBU) Deputy Director General Kono told AUSTR Cutler he 
had "clearly and unequivocally" heard the U.S. government's 
message and that he would convey it to the highest levels of 
the FSA, including new FSA Minister Yosano, and to his 
counterparts in the Ministry of Internal Affairs and 
Communications (MIC).  Pointing out the FSA has not received 
a formal application from Japan Post Insurance, he added that 
an application would "only be the beginning of a rigorous and 
careful review process," which would include evaluation not 
only by the FSA but by the MIC and the quasi-governmental 
Postal Services Privatization Committee (PSPC). 
 
¶5. (SBU) Kono assured AUSTR Cutler he is fully aware of the 
history of bilateral insurance discussions and the need to 
take equivalent conditions of competition into the 
decision-making on any product application.  There is "no way 
we can ingore that" and move to immediate approval, he 
stated, and added the FSA would move forward "in full 
observance of its international and bilateral commitments." 
 
¶6. (SBU) The FSA does have informal contact with insurers, 
Kono acknowledged, but that does not mean application 
decisions are made prior to the receipt of formal 
application.  He pointed, for example, to Japan Post 
Insurance's 2008 request to lift the 10 million yen cap on 
its flagship product.  Nearly a year after its formal 
initiation, the request has not been granted.  In the case of 
a new cancer product, Kono added Japan Post Insurance would 
not only need to apply for a new product license, but also 
request a change to a Cabinet Order governing policy size. 
 
TOKYO 00000387  002 OF 002 
 
 
That, he implied, would be a higher bar for Japan Post 
Insurance to hurdle.  (Note: in a subsequent exchange, 
however, Kono linked approval for a Cabinet Order change to 
approval for a product application.  End note.) 
 
¶7. (SBU) "Speaking personally," DDG Kono said the FSA, as a 
regulator, is working to develop a level playing field for 
all players, foreign and domestic.  The FSA would therefore 
like to see the application process unfold as it is 
envisioned in the postal privatization laws. 
Behind-the-scenes moves to head off an application, he 
suggested, could be counter-productive by spurring a domestic 
political backlash. 
 
¶8. (SBU) Kono concluded by saying the FSA's position has 
always been that Japan Post Insurance should not expand its 
product lines unless it satisfies the conditions established 
for private insurers, including proper risk management and 
consumer protection requirements.  He added new FSA Minister 
Yosano is man with a "balanced view" who will not act in an 
"unconsidered manner." 
 
Application Coming, Says DFM Otabe 
---------------------------------- 
 
¶9. (SBU) AUSTR Cutler also raised U.S. concerns about Japan 
Post Insurance during February 17 and 19 meetings with Deputy 
Foreign Minister Yoichi Otabe.  During the February 19 
meeting, Otabe stated Japan Post Insurance will make a new 
product application, but he did not know when.  If the FSA 
and MIC approve the application, he said, Japan Post 
Insurance's new product would compete in the market with U.S. 
insurers' offerings.  He acknowledged that would lead to 
"equal footing concerns," but asserted U.S. companies would 
still have equal access to the postal network via the Japan 
Post Network Company.  (Note: Otabe had clearly read up on 
the issues between the February 17 and 19 encounters.  End 
note.) 
 
¶10. (SBU) AUSTR Cutler pushed back, pointing out Japan Post 
Insurance would use its priveleged position with the Japan 
Post Network Company to maximize its use of the postal 
delivery channel to the detriment of other insurers.  Such a 
situation would be clearly unfair to private sector 
competitors and would provoke a strong reaction from U.S. 
industry. 
 
Other Interlocutors 
------------------- 
 
¶11. (SBU) Financial Services Agency Postal Savings and 
Insurance Principal Director Toshiyuki Yasui, Postal 
Insurance Director Mitsuhiro Tsuchiya, and International 
Affairs Director Hitoshi Shimura also attended the February 
18 meeting with FSA DDG Kono. 
 
¶12. (U) Assistant U.S. Trade Representative Cutler cleared 
this cable. 
 
 
ZUMWALT