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RHEHAAA/WHITE HOUSE WASHDC
RUEATRS/TREASURY DEPT WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHGV/USMISSION CD GENEVA 3637
RHEHAAA/NSC WASHDC

UNCLAS SECTION 01 OF 04 TOKYO 000338 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/J, EAP/EP, AND EEB 
STATE PASS USTR FOR DUSTR MARANTIS, AUSTR CUTLER, MBEEMAN, 
AND DLEE 
USDA/FAS FOR BERMAN 
NEC FOR LSUMMERS 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR EINV APEC PREL JA
SUBJECT: AMBASSADOR MARANTIS SEEKS GREATER TRADE AND 
ECONOMIC COOPERATION, PROGRESS ON TRADE IRRITANTS WITH 
JAPANESE OFFICIALS 
 
REF: TOKYO 221 
 
SENSITIVE BUT UNCLASSIFED.  NOT FOR DISTRIBUTION OUTSIDE USG 
CHANNELS. 
 
¶1.  (SBU) Summary:  Deputy U.S. Trade Representative 
Demetrios Marantis called on senior Government of Japan (GOJ) 
political and career-level counterparts to work closely and 
quickly with the USG to prevent protracted trade irritants 
related to beef, autos, and Japan Post privatization from 
becoming political irritants. Resolution of these issues will 
allow Japan and the U.S. to focus more attention on further 
building bilateral cooperation in key areas such as trade 
liberalization in the Asia-Pacific Economic Cooperation 
(APEC) forum and the Doha Development Agenda, intellectual 
property rights protection, and promoting trade in 
environmental goods, he said.  GOJ officials acknowledged the 
USG's desire for Japan to allow access for U.S. beef and beef 
products on the basis of science and international standards, 
but asserted that lingering food safety concerns and 
purportedly weak consumer confidence necessitate further 
evaluation of this proposal.  Ambassador Marantis noted the 
USG is considering WTO-related action against Taiwan for 
failure to implement its beef agreement a development that is 
bringing greater attention to our beef trade with Japan and 
underscores the need to find a science -based solution with 
Japan in the short term.  He asked his counterparts to work 
on resolving outstanding U.S. concerns on beef with greater 
urgency.  GOJ officials disagreed that Japan's eco-car 
subsidy program discriminates against U.S. manufacturers, 
arguing that although the program applies separate fuel 
efficiency mileage ratings for U.S., Japanese, and European 
models that differ in terms of calculation method, they are 
in fact compatible and fair.  On Japan Post, GOJ officials 
said they understand fully the USG's level playing field and 
transparency concerns, but cautioned that political 
sensitivities on this issue are high since lawmakers have 
already begun deliberating internally the contents of new 
legislation to reform of the country's banking, insurance, 
and postal services behemoth.  End summary. 
 
¶2.  (SBU) Deputy U.S. Trade Representative Demetrios Marantis 
focused much of his discussion in Tokyo on ways to resolve 
high priority bilateral trade issues related to beef, autos, 
and insurance, while also underscoring the importance of 
strengthening cooperation in areas such as APEC and in 
dealing with third country concerns.  Ambassador Marantis met 
on February 1 with the following Japanese officials: State 
Secretary for Foreign Affairs Koichi Takemasa, State Senior 
Vice Minister and Director of the National Strategy Office 
Motohisa Furukawa, Assistant Cabinet Secretary Chikao Kawai, 
Deputy Foreign Minister Yoichi Otabe, Ministry of Economy, 
Trade and Industry (METI) Vice Minister for International 
Affairs Hiroyuki Ishige, and Agriculture Vice Minister for 
International Affairs Shuji Yamada.  He also engaged on a 
broad range of economic and trade issues, including the 
aforementioned bilateral irritants, over dinner with State 
Secretary Takemasa, Senior Vice Minister for Internal Affairs 
and Communication Masamitsu Naito, Senior Vice Minister for 
Education, Culture, Sports, Science and Technology Masaharu 
Nakagawa, State Secretary for Foreign Affairs Tetsuro 
Fukuyama, and Lower House Chairman of the Land and 
Transportation Committee Hiroshi Kawauchi.  Additionally, 
Ambassador Marantis met with the American Chamber of Commerce 
Japan Board of Governors, as well as local and American news 
outlets, and gave a separate interview with NHK Television. 
 
Beef 
 
TOKYO 00000338  002 OF 004 
 
 
---- 
 
¶3.  (SBU)  Ambassador Marantis expressed concern that market 
access for U.S. beef and beef products remains a troubling 
irritant, one that overshadows the otherwise strong and 
growing agricultural trade relationship between the United 
States and Japan.  He called on the GOJ to allow access for 
beef that is both science-based and consistent with World 
Organization for Animal Health (OIE) standards.  The U.S. has 
a proven track record for mitigating potential risk for BSE 
(Bovine Spongioform Encephalopathy) and has asked the OIE to 
consider reclassifying the U.S. as "negligible risk" for BSE, 
he said.  Vice Minister Yamada agreed it is important to 
ensure food safety based on science, but asserted the beef 
issue remains difficult to resolve due to what he claimed is 
a lack of consumer confidence resulting from the 
"regrettable" frequency of shipments of U.S. beef that fail 
to comply with Japan's import protocol.  Ambassador Marantis 
countered that the U.S.-Japan beef protocol is not 
commercially viable since it does not conform to OIE 
guidelines and that mis-shipments have occurred as a result. 
He noted the majority of the 13 mis-shipments identified by 
authorities since Japan implemented its protocol did not 
involve specified risk materials (SRMs), but rather resulted 
from technical inabilities to comply with Japan's unique 
requirements. 
 
¶4.  (SBU) Ambassador Marantis said the USG is considering 
WTO-related action against Taiwan for its government's 
failure to implement its beef agreement and in that light 
underscored the importance for Japan to make progress in the 
short term on the beef issue.  If Japan could make a clear 
commitment to full OIE compliance, the USG would be willing 
to work with the GOJ towards an interim step if that would 
help politically, he said.  Vice Minister Yamada noted the 
previous Liberal Democratic Party (LDP) led administration 
had put forth a (non-OIE consistent) interim proposal to 
allow imports of beef from cattle up to 30 months of age -- 
something Canada is currently negotiating with the GOJ -- but 
that there is no negotiation with the United States on this 
proposal and Japan,s current government has not yet 
discussed whether it would endorse this option for beef trade 
with the United States.  He said the Food Safety Commission 
(FSC) continues to evaluate the U.S. system for adequate 
control of BSE, and would likely take a "negligible risk" 
reclassification into account should the OIE move in this 
direction, but would not speculate on the FSC's final 
decision. 
 
¶5.  (SBU) Vice Minister Yamada acknowledged the opportunities 
upcoming visits by Secretary Vilsack (April) and USTR Kirk 
(June for the APEC Trade Ministerial) will provide to address 
the beef issue, but declined to say when he thought Japan and 
the U.S. could begin deepening their discussions to remove 
this trade irritant from the bilateral agenda.  Assistant 
Cabinet Secretary Kawai said beef is a "very important" part 
of the U.S.-Japan trade relationship and must be resolved, 
but argued Japan must proceed carefully.  The new Democratic 
Party of Japan (DPJ) led government must manage a highly 
sensitive set of economic and political challenges in the 
run-up to the July Upper House elections in which the party 
seeks an absolute majority, he said.  Senior Vice Minister 
Furukawa suggested the beef issue be addressed as part of a 
broader list of bilateral issues.  Singling out beef tends to 
generate a "here we go again" reaction from GOJ officials, as 
well as the public, who Furukawa claimed see this as just 
another example of U.S. pressure being brought to bear on 
Japan.  He further suggested it is important to work with the 
 
TOKYO 00000338  003 OF 004 
 
 
DPJ government at the political level, noting bureaucratic 
engagement as done under previous LDP administrations is no 
longer sufficient. 
 
Autos 
----- 
 
¶6.  (SBU) In all of his discussions, Ambassador Marantis 
underscored USG concerns with Japan's eco-car subsidy 
program.  These concerns which are rooted in issues of 
fairness related to implementation, could erode the goodwill 
generated by changes Japan announced January 19 that opened 
opportunities for U.S. and other autos imported using the 
Preferential Handling Procedures (PHP) certification process 
to also qualify for eco-subsidies.  He noted that certain 
aspects of the eco-subsidy program are viewed by U.S. 
industry and members of Congress as discriminatory, in 
particular Japan's decision to use different fuel economy 
standards for U.S. vehicles (based on Environmental 
Protection Agency "city" mileage ratings) and European 
vehicles (based on an EU "combined city/highway" rating). 
Ambassador Marantis urged the GOJ to be more inclusive in its 
program by also using a combined mileage rating for U.S. 
vehicles. 
 
¶7.  (SBU) State Secretary Takemasa argued that Japan's method 
of calculation for U.S. vehicles approximates closely the 
standards applied to European and Japanese vehicles.  A 
combined rating applied to U.S. cars would make far more U.S. 
vehicles eligible for the program than either Japanese or 
European models, he claimed.  Vice Minister Ishige echoed 
similar sentiments, noting it would be "extremely difficult" 
to consider the U.S. proposal for a combined rating since the 
EPA city mileage rating was in fact the most compatible with 
Japan's system of measurement.  We must be fair, he said, 
noting that his ministry has been subjected to continual 
media scrutiny -- which largely portrays METI as having 
already caved to U.S. pressure.  (Note:  Per reftel, METI 
informed us February 3 of its decision not to revise its use 
of the EPA city mileage rating; METI subsequently posted to 
its website a list of U.S. models imported under the PHP 
program that are deemed eligible for Japan's eco-subsidy 
program; 43 foreign-made vehicles in total qualify, according 
to METI:  8 U.S. and 35 European models.  End note.) 
 
Japan Post 
---------- 
 
¶8.  (SBU) Ambassador Marantis reiterated the USG's strong 
desire for the GOJ to take into account level playing field 
and transparency concerns as lawmakers consider new 
legislation and regulations governing the privatization of 
Japan Post -- the country's banking, insurance, and postal 
services behemoth.  He told his counterparts USTR attorneys 
are of the opinion the USG has a strong WTO GATS (General 
Agreement on Trade in Services) case relevant to Japan's 
national treatment obligations, but expressed his desire to 
work closely with the GOJ to resolve this issue bilaterally. 
State Secretary Takemasa said the GOJ is well aware of U.S. 
concerns and that he agrees transparency in the reform 
process is "absolutely essential."  Assistant Cabinet 
Secretary Kawai noted the GOJ has made every effort to 
solicit industry input in preparation for drafting the 
legislation that will commence in the coming weeks, including 
two hearings last December and a public comment period that 
closed January 20 (for which the USG also submitted 
comments).  Ambassador Marantis welcomed these opportunities 
but underscored the importance of ensuring that such comments 
 
TOKYO 00000338  004 OF 004 
 
 
are fully taken into account before final decisions are made. 
 Both Takemasa and Kawai separately cautioned that given the 
high political focus and sensitivity on this issue, it is not 
an ideal time to discuss the Japan Post issue through 
detailed bilateral talks particularly with active discussions 
already going on within the GOJ on the contents of proposed 
legislation. 
 
¶9.  (SBU) Senior Vice Minister Naito argued level playing 
field concerns should take into account the needs of 
consumers in more isolated rural areas.  With this in mind, 
he said the GOJ's new legislation will mandate universal 
service for postal and certain other products regardless of 
whether they are profitable.  He questioned the private 
sector's definition of a level playing field, claiming such 
companies are only interested in operating in Japan's larger 
cities where they can expect to make a profit.  Ambassador 
Marantis said governments should not assume where businesses 
will choose to operate but rather focus on ensuring the same 
level of access for all market participants. 
 
Trade and Economic Cooperation 
------------------------------ 
 
¶10. (SBU) Ambassador Marantis stressed that the United States 
also seeks to work closely with Japan to continue to build a 
common agenda on economic and trade issues ranging across 
bilateral, regional, and multilateral initiatives.  APEC is 
proving to be an excellent opportunity, he stressed, to 
strengthen our cooperation on regional economic integration, 
and he expressed hope that Japan will work to achieve a 
number of concrete deliverables in its 2010 APEC host year in 
addition to teeing-up deliverables for the 2011 U.S. host 
year.  On cooperation relating to environmental goods, Deputy 
Minister Otabe said that Japan strongly supports working 
closely together with the United States and other partners on 
the Trade and Climate Initiative.  Noting that Japan has been 
on the record for some time in support of moving forward with 
such an initiative, he pledged Japan,s support to help with 
recruitment of other developing countries to join the core 
group and suggested Canada may seek to link an announcement 
on this work to the G-8 meeting this summer.  Ambassador 
Marantis said he hoped the Initiative would be ready to 
announce prior to the G-8. 
 
¶11. (SBU) Deputy Minister Otabe and Ambassador Marantis also 
shared similar views on the importance of staying in close 
touch on issues of mutual concern relating to China, and 
proposed that the planned USTR/State ) MOFA/METI deputies 
meeting in the Spring would be an ideal opportunity to step 
up senior level coordination in this area.  Both agreed that 
APEC is another ideal topic to add to the agenda for that 
meeting. 
 
¶12. (SBU) On the bilateral front, Ambassador Marantis 
stressed his hope that the United States and Japan can move 
forward with an updated bilateral Regulatory Reform 
Initiative in the very near term.  Suggesting that it has 
taken time to work the issue through Japan,s new government, 
Otabe expressed his expectation that Japan will be prepared 
to move forward soon. 
 
¶13.  (U) This message has been cleared by USTR. 
ROOS