The government and the ruling Liberal Democratic Party basically agreed Tuesday to revise a package of postal-services deregulation bills, making it likely that the legislation will pass the Diet before the current session ends July 31.

The agreement effectively ends another round of tug-of-war between Prime Minister Junichiro Koizumi and the “resistance forces” within his party. Koizumi and other LDP executives will negotiate further before finalizing the revisions, as the prime minister opposes some of the conditions offered by the other executives, party sources said.

On the surface, the compromise marks a big accomplishment for Koizumi, who has made the pending postal legislation one of the most important elements of his reform agenda.

Behind the facade, however, the agreement is widely seen as a defeat for the prime minister because strict conditions attached to one of the bills are likely to discourage private firms from entering the mail services business.

Tuesday’s agreement calls for revisions to be made to another bill that allows the government to establish a new public corporation next year to take over postal services.

One of the revisions stipulates that the number of post offices will be maintained “throughout the nation” even after the public entity is set up. It will also allow the public corporation to make investments in subsidiaries “for outsourcing purposes.”

Koizumi and his LDP foes agreed not to make amendments in the first bill. However, they agreed to make sure the party’s antideregulation position is somehow reflected in a less binding measure than legislation. The posts and telecommunications minister or the Cabinet Legislation Bureau chief will explain details in the Diet.

The details include specifying direct mail as letters, essentially shutting out private firms from the profitable service. The Mail Law stipulates that private firms cannot deliver letters.

The LDP also wants to require private firms entering the mail services business to set up a certain number and quality of postboxes in each town and village.

Earlier in the day, the proposal was approved by the LDP’s policy research council and the executive council.

The original set of four postal services deregulation bills are now being debated in the Diet.

In April, the LDP took the unprecedented action of sidestepping traditional procedure and giving official approval to the content of the postal bills before the government submitted them to the Diet.

The party instead gave the greenlight to the government to submit the bills and agreed to go into necessary procedures before the legislation is put to the vote in the Lower House committee.

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