February 8, 2008; Volume 04, Number 05

of the

Japan Considered Podcast

[Listen to the audio file by clicking here]

Clink Links Below for Today's Topics

Introduction
Public Funding for Japan’s Political Parties
The Poisoned Gyoza Incident
Significance of the Tainted Gyoza Incident
Ordinary Diet Focuses on the Gasoline Tax
Origins of the “Provisional” Gasoline Surtax
The Current Gasoline Tax Surcharge Extension State of Play
Concluding Comments

Good Morning. From beautiful Spring Valley. In the Midlands of South Carolina. Today is Friday, February 8th, 2008. And you are listening to Volume 04, Number 05, of the Japan Considered Podcast.

Introduction

Sunny here again this morning. But chilly! Only 36 degrees at 5:00 a.m. And we’re not expected to get much beyond the mid-60s by this afternoon. Now that’s downright cold here. Especially after those high 70s earlier in the week. I hope you have as nice weather wherever this program finds you today.

Speaking of which, I’m Robert Angel. Creator and maintainer of the Japan Considered Project. And creator and host of this Podcast. Each week at this time we consider a few events in the news from Japan. Events that seem to have longer-term significance for Japan’s domestic politics and conduct of international relations. A hearty South Carolina welcome to each of you new listeners. Glad you found the program. Quite a burst of new listeners during the past few weeks. From all over the world. Good to have you with us. I hope the program meets your expectations.

These days, there’s plenty of news from Japan. Even in English. It’s not like it used to be in the 1970s, or even 1980s. When a brief Japan-related story in the New York Times was cause for celebration. So, now we have to pick and choose. Can’t cover everything. Can’t even cover everything important. And, of course, the limitations of the individual analyst – yours truly, in this case – play a role as well.

The past couple of weeks have been busy again in Japan. Hundreds of articles in the Japanese news about political events. Some so significant we simply can’t ignore them. We’ll begin today with some newly-arrived information on public funding of political parties. Then move to the “Gyoza Incident.” Yes, that’s right. The Gyoza Incident. If you haven’t heard about it, well, it’s significant. Especially how it’s being handled by both Japan and Mainland China. Then we’ll devote the rest of our time together trying to sort out how the ruling coalition and opposition parties have been handling the gasoline tax issue. Including, the unfortunate eruption of violence in the halls of Japan’s Parliament. And how Japan’s political media have responded to it. Not a nice story. For anyone!

Public Funding for Japan’s Political Parties

Those of you who listened to the last two programs may recall that I asked listeners to e-mail more specific information about the rules that determine government funding of political parties in Japan. Well, at last, I received a response. And from a completely unexpected source. Mr. Tsuyoshi Inajima. Mr. Inajima, a Tokyo native, is a senior here at USC. Majoring in journalism. This semester he’s taking one of my undergraduate classes.

Mr. Inajima kindly searched out the text of the political funding law for me, and a related article. I’ll put a link to the law in the transcript. It’s in Japanese. And I haven’t been able to find an English translation. Sorry about that. But some of you may find this site useful.

If memory serves, I said a week or so ago that the total amount of government funding for political parties was based on 200 yen per Japanese citizen. Well, that’s wrong. It’s 250 yen. Quite a difference. Bringing the total to be divided among the parties up above 31 billion yen per year now. A lot of money! Even in Japan’s politics.

Another point Mr. Inajima noted that I failed to mention is that the distribution is based on the total number of Diet members belonging to the Party as of January 1st each year. That January 1st date is critical And will affect the calculations of any members of the Diet considering formation of a new party.

Quite a different situation than when former Prime Minister, Morihiro Hosokawa and his friends, formed Nihon Shinto back in the early 1990s. That Party, if memory serves, relied heavily upon funds provided by Hosokawa himself. A measure not likely to be repeated any time soon! We’ll just have to wait and see how the prospect of public funding affects the plans of reform groups to create a new party. Before or after the next general election? Or, not at all? Hmmm. I still suspect we’ll see something before long, though. The indications of dissatisfaction within the LDP, and even within the DPJ, are just becoming too obvious.

So, thanks, Mr. Inajima, for the information.

The Poisoned Gyoza Incident

Let’s next turn to the “poisoned gyoza” incident.

Now, it may sound a little far-fetched for us to start discussing “gyoza” on this program. When there are so many other important issues to consider. But you can file this issue under events that have both international and domestic significance.

“Gyoza,” by the way, are a fried, steamed, or boiled dumpling. They’re said to have originated in China. And they’re very good. No matter how they’re prepared. “Impossible-to-eat-only-one” – sort of food.

I still recall vividly my first exposure to gyoza. Back in 1961. At a small shop on one of the less reputable streets of Fukuoka, Japan. Incredible place. The elderly woman who ran it, and her daughter, were from Northern China, they said. Their energies, as I recall, went entirely into preparation of that flavorful treat. With very little left over for sanitation. Or even cleanliness. I still recall the looks on their faces as they watched a gangly foreign lad eat plate after plate of their fried dumplings. In fact, they stopped charging me, if memory serves, after the fourth or fifth dish.

Gyoza have become a regular item at Japan’s lunch and dinner tables. But they’re not easy to make from scratch. Made properly, it takes forever! So it’s no surprise that a large proportion of those consumed are frozen ready-made. And imported from China. Where low-cost labor and appropriate materials are widely available.

Reports of serious illnesses in Japan linked to consumption of gyoza began to appear in late January. With several members of a family in Chiba seriously affected. Within days, reports of similar symptoms, all related to consumption of ready-made gyoza imported from China, had increased to over 100, throughout Japan. The number of cases of suspected poisoning rose rapidly thereafter, reaching over 1,000 in just a few days.

Within a day or so of the first reports, Japan’s public health authorities reported discovery of a highly toxic pesticide in the suspect gyoza. Naturally triggering speculation on its source. Was the toxic pesticide accidentally introduced into the gyoza during the manufacturing process? Or was it deliberately added by a saboteur? If the latter, did the incident occur in China or in Japan? And why?

So, within days, if not hours, Japan’s government had another incredibly sensitive political problem on its hands. Both domestically and internationally. Domestically because, understandably, Japan’s political media was loudly demanding that the Fukuda Cabinet “do something” about this terrible problem. “Show some leadership!” “Take action” of some kind.

All understandable. This is a Real Problem for Japan. Not just “gotcha politics” type maneuvering. The thought of someone tampering with imported food products is a genuine nightmare. For everyone. Japan’s 126 million people depend heavily upon imported food to stay alive. It’s hard to imagine today’s Japan producing enough food to survive on. It might be done. Given time. But at enormous cost. Sooo, imports are inevitable.

Add to this recent concern over the safety of other Chinese exports. Such as toothpaste, pet food, and many others. Plus widespread publicity about pollution problems in that enormous country. And you have the basic ingredients of a public panic. 

China’s government too was naturally concerned about this latest series of international complaints about the safety of Chinese exports. Exports upon which continuation of China’s rapid economic growth depends. Economic growth upon which China’s central government now depends heavily for its legitimacy. Beijing immediately dispatched a five-member team to Japan to investigate the problem. They arrived in Tokyo on Sunday, the 3rd. To meet with Japanese government counterparts, and to investigate the problem.

Japan reciprocated by dispatching their own investigative team to China. Where they were able to tour the plant suspected of producing the tainted gyoza, and make other inquiries. By today, Friday, Japanese and Chinese investigators working together had concluded that the tainted gyoza all were produced in one Hebei Province factory on October 1st and 20th of last year. And consensus opinion seemed to be that the toxic pesticides were present in the gyoza before they left China. One can only hope this is an isolated incident that will cause no further suffering.

Significance of the Tainted Gyoza Incident

Well, as we often ask on this program, “So What?” What does this tell us about Japan’s domestic politics and conduct of international relations? Something significant, I think. First, and most important, neither Beijing nor Tokyo has succumbed to the temptation to manipulate this unfortunate incident for domestic political advantage. And that’s a very good thing. There are enough differences of genuine interest between Asia’s two most important nations as it is. No need to add to the total unnecessarily.

China has been unusually cooperative in response to Japan’s concerns. As far as I can see, from reading carefully the Japanese media reports. Providing all information requested. And so on. One senior Chinese official was even reported by Japan’s press to have suggested that the tainting may well have happened while the gyoza were in China. The work of someone opposed to good relations between China and Japan. Of course, China has a lot at stake with this incident. And has every reason to be cooperative. Given recent incidents that have called the safety of other Chinese exports into question. In China’s most important export markets. And their hopes for an influx of visitors for the Olympics this year. Still, no long-time observer of Sino-Japanese relations would have been surprised by quite a different reaction from Beijing.

The Fukuda Government too has been remarkably prudent in their response to the incident. No effort to implement dramatic action with the hope of raising the Cabinet’s sagging public approval ratings. Again, a very positive sign. Prime Minister Fukuda all week has been under intense pressure to announce some dramatic move to protect the health and welfare of the Japanese population in the face of this threat. He, chief government spokesman Machimura, and other government officials have responded that they must first discover the true cause of the poisoning, and the extent to which it has spread, before determining appropriate action. All Tokyo officials have avoided pointing accusatory fingers in the direction of China. Imposing immediate embargoes on food imports. Or any other such headline-grabbing actions.

The Cabinet did appear to use the tainted gyoza issue to speed up Fukuda’s plans for creation of a new integrated cabinet-level consumer agency. That would include oversight security of the food supply in its broad responsibilities. Day before yesterday, the 6th, Prime Minister Fukuda gave State Minister Fumio Kishida responsibility for overseeing prompt creation of the new agency. But that’s quite different. Even reasonable behavior.

So, the prudent handling of this tainted gyoza issue during the past few days suggests that both Beijing and Tokyo still see greater advantage in bilateral cooperation than in bilateral conflict. At least at present. A cooperative outcome for this issue could even strengthen bilateral confidence. As the two countries cope with more difficult issues, such as the East China Sea gas exploitation issue. And national border demarcation. Let’s hope, anyway. I’ll try to keep you posted.

Ordinary Diet Focuses on the Gasoline Tax

Now, let’s turn to parliamentary affairs during the past couple of weeks. To consider the behavior there of the government and opposition parties. And what those observations may tell us about the future of Japan’s representative politics.

Well before the opening of this 169th Ordinary Session of the Diet on January 18th, DPJ spokesmen said the main Opposition Party intended to make this into the “Gasoline Tax” Diet. So far, at least, it seems they’ve gotten their wish. An overwhelming majority of Japanese media coverage of parliamentary affairs since Friday before last has focused on how the upcoming expiration of the tax surcharge on gasoline has been handled. With the Fukuda Cabinet on record as determined to renew the surcharge at its current level. And to renew it for ten years, at that! And, to continue to earmark the proceeds of the tax for road construction and maintenance.

While Ozawa’s DPJ is on record as determined to force Fukuda to dissolve the Lower House and call a general election. By preventing extension of the surcharge. Well, the DPJ’s official position is that they oppose extension of the surcharge. And demand abolition of the special account system that earmarks such funds specifically for the construction and maintenance of highways. But their primary objective of forcing a general election is well understood.

Origins of the “Provisional” Gasoline Surtax

What are we to make of this complex issue? First, let’s review the substance. What’s actually being discussed? Is this a gasoline tax issue? A road construction issue? Or an administrative reform issue? Well, I think it’s all three, and here’s how.

The first “provisional” tax surcharge on gasoline was implemented in 1974, during the premiership of Takeo Fukuda, Yasuo Fukuda’s father. And has been renewed with a minimum of political anguish seven times since. With increases in the rate accompanying three of those “provisional” renewals. Further, proceeds of the tax increase have been set aside, or ear-marked, for construction and maintenance of roads. Understandable, perhaps, in 1974. As Japan struggled to cope with the “Oil Shock.”

Now, “temporary” taxes like this are easier to impose than they are to remove. Especially after more than three decades of “temporary.” Governments are naturally fond of revenues, especially ministries of finance. It’s easier for budget examiners to say “yes” to political demands for allocations of government funding than to say no. And all of that politically expedient yes-saying requires reliable and expanding sources of revenue! If you doubt that, try taking an informal poll one afternoon in the Ministry of Finance cafeteria on the ideal rate for the consumption tax!

In addition to the general interests of finance ministry bureaucrats, encrusted special interests inevitably develop around those sections of the government bureaucracy given responsibility for distribution of the funds collected. In this case, the transportation and construction ministries. More bureaucratic jobs. More bureaucratic promotions. And better post-retirement prospects.

Add to that bureaucratic mix elected political representatives. Especially those who take credit for assuring allocation of a “fair share” of the distributed construction funds to their own electoral districts. Who’ve become the Highway Zoku members. And, of course, the construction and maintenance companies who end up winning the public works contests. Companies often willing to reward generously those politicians who “take care of them.”

Put all of this together – bureaucrats; politicians; government contractors. Oh, and prefectural and local government officials, of course. And you have a bond that shames the adhesive qualities of Duct Tape and Gorilla Glue used together! In other words, the general public, if asked, will support overwhelmingly a reduction in their tax obligation. But the special interests that benefit from distribution of the proceeds of that tax will fight tooth and nail to maintain it. And, as we also know, special interests trump the general interest nearly every time. Japan’s “provisional” gasoline tax issue is no different.

The Current Gasoline Tax Surcharge Extension State of Play

So, where do we stand now? Well, the current extension of the “provisional surcharge” on the gasoline tax will expire at the end of this fiscal year. March 31st. If nothing is done. The Ministry of Finance estimates that removal of the surcharge would cost the government 2.6 trillion yen in tax revenue. Shared between the central government and local governments.

The Fukuda Cabinet, therefore, has concluded that another extension of the surcharge is essential. Not to appease the special interests described above, you understand. But for the general good. Not because Prime Minister Fukuda relies heavily on Highway Zoku support to keep the LDP together. But because Japan still really needs to build more roads! And to do a better job of maintaining them. Also, there’s the foreign reputation angle. Foreign observers would look askance at Japan making gasoline cheaper to buy, given current sensitivity to environmental problems, including auto emissions. Hmmm.

The DPJ is unimpressed with these arguments. Ichiro Ozawa and his colleagues have insisted that the provisional surcharge on gasoline should be allowed to expire. Period. Significantly reducing the cost of gasoline to the Japanese consumer. Especially necessary during this period of rising crude oil prices. Gasoline now costs 154 yen per liter. Elimination of the tax would reduce the price by 25 yen. A significant reduction. Further, the DPJ insists, the system of allocating, or ear-marking, tax revenue for road construction should be eliminated. And road construction and maintenance, like other government expenditures, should be justified and paid for out of the general account.

Now, a moment ago I questioned the sincerity of the Fukuda Cabinet’s insistence they’re considering only the “Greater Good” with their proposal to extend the provisional surtax on gasoline for ten years. Rather than bowing to pressure from the LDP Highway Zoku and their friends back home in the construction business. But similarly, the DPJ’s proposal to allow the surtax to expire, and to eliminate the road construction earmark, also smacks of political maneuvering.

Specifically, it appears to me that the DPJ intends to create tension within the LDP by proposing a measure the LDP’s powerful highway zoku is bound to oppose. Knowing well that Prime Minister Fukuda relies heavily on senior Highway Zoku LDP members to keep things together within the LDP. Making it difficult, if not impossible, for Fukuda to agree to any compromise. Much as Koizumi used the postal reform bill to smoke out LDP postal zoku members prior to the 2005 general election.

Too cynical? Probably not.

But the ruling coalition surprised everyone when on Monday afternoon, January 28th, they announced plans to submit a stopgap bill that would maintain the current level of gasoline tax for just two months beyond it’s current March 31st expiration date. In case the DPJ continued to refuse to vote on the ten-year extension bill. This maneuver clearly came as a surprise to the DPJ leadership. Who immediately cried “foul,” and threatened to boycott Diet deliberations. Go to the mattresses. And so on. The two-month extension would provide the ruling coalition time to pass their bill with a Lower House over-ride, even without a vote in the Upper House. The ruling coalition made good on their threat Tuesday night, submitting the bill to the Lower House. Saying they intended to pass it on Wednesday, the 2nd.

The fat was in the fire! After hours of turmoil and uncertainty, the ruling coalition on Wednesday agreed to withdraw their stopgap bill from the Lower House. After unusual mediation by Lower House Speaker, Yohei Kono, and Upper House President, Satsuki Eda. According to Japanese media reports on Thursday, both the ruling coalition parties and the DPJ agreed to reach some kind of conclusion by March 31st. With the exact meaning of that phrase left intentionally vague. Since then, the Diet has returned to something approaching normal. Everyone realizes agreement will be difficult to achieve, though. And that the two parties simply have bought some time. Time hopefully they’ll devote to accomplishment of genuinely important legislation. But Japan’s political media continues to focus coverage on manipulation of this gas tax issue. I’ll try to keep you posted.

Concluding Comments

There’s a lot more to say about this party confrontation concerning the gasoline tax. Including parliamentary majority decision rules, and the exercise of violence in the Diet. But it all will have to wait until next week. Until then, here’s a nice bluegrass clip to brighten your day. Have a listen to just a snippet from Washington, D.C.’s remarkable Dirty River Band. Billy Park gives us some of “That Memphis Sound.” I’ll put a link in the transcript to their New and Improved Website. Go have a look. And enjoy their music.

[Bluegrass Clip]

Goodbye all. Until next week.