VZCZCXRO3407
RR RUEHFK RUEHGH RUEHKSO RUEHNH
DE RUEHKO #0706/01 0890702
ZNR UUUUU ZZH
R 300702Z MAR 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC 1869
INFO RUEHBJ/AMEMBASSY BEIJING 8497
RUEHUL/AMEMBASSY SEOUL 4525
RUEHFR/AMEMBASSY PARIS 6475
RUEHKSO/AMCONSUL SAPPORO 3764
RUEHOK/AMCONSUL OSAKA KOBE 7016
RUEHFK/AMCONSUL FUKUOKA 3222
RUEHNH/AMCONSUL NAHA 5564
RUEHGH/AMCONSUL SHANGHAI 0554
RUEHHK/AMCONSUL HONG KONG 6732
RUEATRS/TREASURY DEPT WASHDC
RHEHAAA/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBS/USEU BRUSSELS
RUEHIN/AIT TAIPEI 7293

UNCLAS SECTION 01 OF 04 TOKYO 000706 
 
SENSITIVE 
SIPDIS 
 
USTR FOR AUSTR CUTLER, BEEMAN, AND HOLLOWAY 
NSC FOR LOI 
PARIS FOR USOECD 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV JA
SUBJECT: INSURANCE: JAPANESE AGENCIES ON NEW POSTAL PRODUCT 
 
REF: A. TOKYO 629 
     ¶B. TOKYO 617 
     ¶C. TOKYO 616 
     ¶D. TOKYO 555 
 
¶1. (U) This is an action request.  See paragraph 20. 
 
Summary 
------- 
¶2. (SBU) Following a cabinet minister's public remarks 
promoting Japan Post Insurance (JPI) and dismissing market 
fairness complaints of U.S. insurers, EMIN raised U.S. 
concerns about JPI and the politicization of postal 
privatization on March 25 with senior officials from three 
relevant agencies.  Japanese officials generally replied that 
what they called a "fair process" has been laid out in 
Japanese law and that JPI's recent regulatory request will be 
judged on criteria set out in the law.  Some downplayed U.S. 
concerns by suggesting those concerns are motivated by the 
protection of U.S. firms' market share and not by market 
fairness or the transparency of regulatory processes. 
Nevertheless, those officials expressed a willingness to 
accommodate U.S. concerns, but asked for examples of specific 
measures the U.S. would like implemented to improve the 
process.  End summary. 
 
Raising U.S. Government Concerns 
-------------------------------- 
¶3. (SBU) Following Ministry of Internal Affairs and 
Communications (MIC) Minister Kunio Hatoyama's public remarks 
regarding Japan Post Insurance (Kampo) moving to offer a new 
cancer insurance product (refs A-C) and dismissing the 
concerns of U.S. insurers, EMIN met officials March 25 from 
the Office for the Promotion of Privatization of Postal 
Services (OPJP), Financial Services Agency (FSA), and MIC. 
EMIN used the separate meetings with OPJP Director General 
Hideyuki Furikado, FSA Supervisory Bureau Deputy Director 
General Toshiaki Ido, and MIC Postal Services Policy Planning 
Department Director General Hiroomi Kira to reiterate the 
U.S. government's deep and growing concerns about 
developments in postal privatization, including Japan Post 
Insurance's (JPI's) recent moves to bring a new cancer 
product to market and the increasing politicization of the 
process. 
 
OPJP Response 
------------- 
¶4. (SBU) Director General Furikado outlined the steps OPJP 
has taken, as the secretariat to the Postal Services 
Privatization Committee (PSPC), to make the privatization of 
Japan Post transparent.  He noted Japan reached out to a 
variety of stakeholders and that the American Chamber of 
Commerce in Japan (ACCJ) had appeared before the PSPC, both 
on specific issues and as part of the three-year review of 
postal privatization now underway. 
 
¶5. (SBU) Furikado directed special attention to comments an 
ACCJ representative made to the PSPC November 10, 2008, in 
which the ACCJ representative was quoted as saying the 
organization "appreciates measures taken so far to establish 
equivalent conditions of competition."  Specifically, 
Furikado continued, the ACCJ representative welcomed the 
access private companies had been given to the postal network 
and "evaluated especially highly" the FSA's work to regulate 
the postal financial companies in the same manner as private 
sector companies.  He passed a copy of the remarks, in 
Japanese, to EMIN.  A copy and informal translation has been 
sent to EAP/J and USTR. 
 
¶6. (SBU) Furikado described a two-tier process that he said 
JPI will be required to follow to introduce a new cancer 
product (ref C).  The process he described includes a request 
to revise a government administrative ordinance and an 
 
TOKYO 00000706  002 OF 004 
 
 
application for a product approval.  OPJP Director Nobuyuki 
Tajiri, who sat in with Furikado, clarified that "it would 
not be impossible" for JPI to pursue the ordinance change and 
the product application at the same time, but stated, noting 
remarks by a JPI executive, that JPI is not considering that 
approach. 
 
¶7. (SBU) Noting JPI in 2008 had requested the introduction of 
a product rider under the same procedures, Furikado asserted 
a transparent process is in place.  He added the ACCJ and 
other stakeholders had "positively evaluated" that process in 
PSPC hearings (though that information is not included in the 
hearing excerpts passed to EMIN).  Furikado also said that up 
until November, the ACCJ was welcoming GOJ efforts on postal 
privatization and the way privatization was progressing.  He 
stated current U.S. concerns probably had to do with the 
competitive implications of JPI's proposed new cancer product 
for U.S. companies and were not related to the process 
itself, because the process has not changed. 
 
¶8. (SBU) When EMIN noted the various examples of politicians 
interjecting into the postal privatization process since 
November, DG Furikado suggested that if Minister Hatoyama's 
comments were of concern, the right venue for raising those 
concerns or clarifying the minister's intentions would be 
discussions with MIC officials.  The PSPC and OPJP, he said, 
are more specialized and neutral organizations with a 
responsibility to manage the process itself. 
 
¶9. (SBU) Furikado would not comment on remarks by other 
Japanese politicians except to note opposition Democratic 
Party of Japan (DPJ) parliamentarians are asking his office 
about contacts with U.S. government officials regarding Japan 
Post and that he would probably have to note our March 25 
meeting.  EMIN said the U.S. values transparency and the work 
that has been taken over the years to boost transparency in 
the U.S. government.  He said Embassy officials would be 
willing as well to meet with interested Diet members to 
discuss USG concerns about postal privatization, as officials 
do on other issues. 
 
¶10. (SBU) Furikado closed with a preview of what he said 
might come up in meetings with MIC and FSA.  The U.S. share 
of the cancer insurance market is nearly 80 percent, he said. 
 To many Japanese, that figure indicates the market is 
already open to U.S. companies and that a potential loss of 
market share is the reason why U.S. companies are concerned 
about JPI's actions. 
 
FSA Response 
------------ 
¶11. (SBU) Financial Services Agency DDG Ido told EMIN the FSA 
is fully aware of U.S. concerns about postal privatization 
and JPI's March 19 administrative ordinance revision request. 
 He said the FSA will ask JPI to explain the proposal in 
order to render a decision on whether to remove that 
regulatory barrier to JPI bringing a new cancer product to 
market.  Asked about the timeframe of the FSA's decision, he 
said there is no required deadline but, as a government 
entity, the FSA is required "to consider the proposal 
sincerely." 
 
¶12. (SBU) Ido told EMIN the standards the FSA will use to 
judge JPI's request "have nothing to do" with what is going 
on in the Diet or among politicians.  The FSA, he said, will 
base its decision on the postal privatization laws.  As has 
been explained in previous meetings with U.S. officials, the 
key principles in the law are establishing equivalent 
conditions of competition in the market while ensuring the 
postal entities have sufficient management freedom to 
privatize and enhance the benefits the entities provide to 
the Japanese people. 
 
 
TOKYO 00000706  003 OF 004 
 
 
¶13. (SBU) Enumerating some examples for Ido, FSA Postal 
Insurance Supervisory Bureau Director Mitsuhiro Tsuchiya said 
the FSA specifically will consider market conditions, 
including the degree of competition in the market and the 
benefits the Japanese people may expect if a new product is 
introduced.  He said the FSA will also evaluate JPI's 
position in the market, its financial condition, and the 
effects of a new product on the organization's profits. 
These factors will be considered "comprehensively" along with 
a check of JPI's "preparedness in providing appropriate 
service" to consumers.  Ido stated there would be no 
discrimination against domestic or foreign companies in the 
FSA's decision. 
 
¶14. (SBU) In response to the point that the politicization of 
the process undercuts work to establish equivalent conditions 
of competition, Ido said the privatization laws set out a 
ten-year transition period for the postal financial entities 
to reach full private sector status, including the sell-off 
of all government ownership.  The law, he continued, lays out 
the way forward, including new product applications.  If the 
U.S. government has a problem with developments within the 
established legal structure, said Ido, the FSA is open to 
hearing them.  Changes to the legal structure, however, are 
not a matter for consideration by the FSA.  "Our mission is 
to consider this (the request for an ordinance change) by the 
law." 
 
¶15. (SBU) Subsequent to the meeting, Director Tsuchiya asked 
econoff for clarification of the U.S. position.  The FSA will 
surely take U.S. concerns into consideration before making 
any decision, he said, but what conditions must be met before 
JPI should be allowed to sell cancer insurance?   What 
specifically, he asked, would the U.S. government like to see 
happen to ensure a level playing field? 
 
MIC Response 
------------ 
¶16. (SBU) Director General Kira told EMIN postal 
privatization is designed as a ten-year process in which the 
postal financial entities are expected to "fade into" the 
private market.  And to act like private companies, he said, 
Japan Post Bank and Japan Post Insurance will need over time 
to expand their product lines.  MIC's role in the process, 
along with the FSA and PSPC, is to oversee that process and 
to ensure that it is transparent and fair.  Like his 
counterparts at the FSA and OPJP, Kira argued the 
administrative procedures used for other product applications 
indicate a transparent and fair process has been established. 
 
¶17. (SBU) Pressed on Minister Hatoyama's comments and the 
subsequent politicization of the process, Kira stated that, 
as one of the main principles of the privatization is to 
increase convenience for the Japanese people, an application 
by JPI to bring a new product to market "should be considered 
in a forward-looking manner."  That, he said, is what MIC 
officials have interpreted Minister Hatoyama's comments to 
mean. 
 
¶18. (SBU) Director General Kira noted that in the cancer 
insurance market, U.S. companies have a market share of 
almost 80 percent.  He said he is aware the ACCJ and American 
Council of Life Insurers (ACLI) have raised concerns about 
JPI's plans and that MIC and the Japanese government wish to 
be responsive.  The PSPC, he noted, had provided 
opportunities for stakeholders to comment on postal 
privatization and he hopes there will be further 
opportunities to exchange opinions. 
 
¶19. (SBU) Echoing his boss, MIC Savings and Postal Director 
Yamazaki told EMIN there are many stakeholders in postal 
privatization and that within the Japanese government there 
is a consensus to undertake the efforts needed to ensure the 
 
TOKYO 00000706  004 OF 004 
 
 
success of the privatization.  Transparency and fairness are 
included within the privatization laws and continue to be 
taken into account as issues arise.  If the U.S. government 
has specific concerns, he concluded, MIC would hope to 
address them. 
 
Action Request 
-------------- 
¶20. (SBU) The comments from FSA and MIC officials requesting 
greater specificity about U.S. concerns (paras 15 and 19) 
highlight the need to refine U.S. talking points, per 
discussion in ref D. 
POST