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OPINION:
Beauty of the deal: Coty seeks Probing the
Chinese skin-care company man in charge
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Page 14
KKDN PP 9315/10/2010 (025811)
VO L . X X X V N O. 6 9 * * Monday, December 6, 2010
ASIA
(India facsimile Vol. 2 No. 130)
asia.WSJ.com
Thailand celebrates King Bhumibol’s birthday
U.S.-Korea
MICA (P) NO. 164/10/2010
pact fortifies
relationship
SK. MENPEN R.I. NO: 01/SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998
BY EVAN RAMSTAD The pact, which requires
legislative approval in both
SEOUL—The U.S. and countries, is the largest by
South Korea over the week- value of trade volume any-
end finally finished reshaping where in the world since the
a sweeping free-trade agree- North American Free Trade
ment that had been stuck in Agreement took effect in 1994
legislative limbo since 2007, involving the U.S., Canada and
making compromises that Mexico.
drew some political criticism U.S. President Barack
here over fairness but not Obama said it would support
enough to harm the likelihood at least 70,000 American jobs,
of ratification. an important selling point as
Trade Minister Kim Jong- he pushes for ratification in
hoon, in a nationally televised the U.S. Congress.
news conference that lasted The floor speaker of South
more than an hour, on Sunday Korea’s opposition party de-
rejected critics who, before rided the revised agreement
hearing details, were accusing as an “economic attack” and a
his negotiating team of caving “humiliation.” But leaders of
in to U.S. pressure in the re- the ruling party, which con-
vising the agreement. trols 171 of the 299 seats in
He also denied acting too parliament, endorsed the
swiftly to make a deal in the changes and said ratification
aftermath of a North Korean is likely.
attack on South Korea, an The U.S.-South Korea deal
event that prompted Seoul to doesn’t open every economic
look to Washington for reas- segment in either country. But
Reuters
surance of their decadeslong it is expected to boost two-
defense alliance. Please turn to page 18
Thailand on Sunday marked the 83rd birthday of King Bhumibol Adulyadej, who called for unity and hard work to keep the country “I only negotiated this on
happy and prosperous in the face of political conflict. The king appeared at Siriraj Hospital in Bangkok, above, before attending a the basis of economic princi- North Korea increases its
ceremony at the Grand Palace. He was admitted in September 2009, but there has been no detailed explanation of his hospitalization. ples,” Mr. Kim said. criticism of the South ............ 5
Diplomatic
disclosures
India presses for access
to key BlackBerry data More energy,
BY AMOL SHARMA take a little time, because it’s continued, with its govern-
a new technology.” ment citing heightened na- fewer emissions.
NEW DELHI—India’s gov- The secure nature of tional-security concerns as
ernment is in discussions
with companies that use Re-
BlackBerry’s corporate, or en-
terprise, email service has
reasons for needing to unlock
encrypted messages.
With technology
search in Motion Ltd.’s
Leaked U.S. diplomatic cables BlackBerry to gain access to
been one of its chief selling
points for business and gov-
RIM has maintained that
only its corporate customers
we can do both.
shed new light on the their employees’ secure com- ernment users. But that fea- have the ability to unlock se-
munications when seen as ture has been problematic for cure email messages, and now To meet growing demand, the world
climate of tension between
the U.S. and China over a necessary, said a top Indian countries that say they can’t India has initiated talks with will need all economically viable
massive rupture between official. intercept BlackBerry commu- some of those companies. energy sources—while also mitigating
Google and the Chinese Home Secretary G.K. Pillai nications. “We’ve had a round of emissions. ExxonMobil is developing
government. Page 3 also dismissed reports that RIM has been engaged in a meetings with the compa-
the smartphone maker’s ser- high-stakes tug of war with nies,” Mr. Pillai said. He technologies to help address this
vices will be blocked if the various countries including added that their response has challenge today and for the future.
India government’s demands aren’t
met by the end of January.
India, Saudi Arabia and the
United Arab Emirates, which
been, “ ‘If you tell us you’ve
got a suspect from our com-
Learn more at exxonmobil.com
A decision over whether to “We’re trying to find solu- had threatened to ban Black- pany who is a national secu-
approve a South Korean- tions where everybody’s in- Berry services that they rity issue,’ ” the company will
owned steel plant could terests are in one sense pro- couldn’t monitor. RIM settled provide the necessary access.
define India's future. Page 4 tected,” Mr. Pillai said during with some countries, but ne- Mr. Pillai didn’t say which
an interview. “It’s going to gotiations with India have Please turn to page 18

2. 2 * * THE WALL STREET JOURNAL. Monday, December 6, 2010
PAGE TWO
What’s News— Inside
i i i
Business & Finance
n Miners are banking on pro-
longed strength in the commodi-
ties market, as the companies buy
other miners or launch joint ven-
tures. The deals range from gold
to coal and stretch from Canada
to China as mining companies
move to quickly snare limited re-
sources and develop new ones. 20
n The bond market is stumbling
after a stellar two-year run. More
investors are betting that stocks
Business & Finance:
will post better returns in the Examining AIG’s plan
coming months. 19
to sell Nan Shan. 19
n Top U.S. Senate lawmakers
said they believed they were
closer to a deal that would keep
the Bush-era tax cuts from expir-
ing at the end of the month. 8
n China next year will shift mon-
etary policy to “prudent” from the
current “moderately loose,” codi-
fying a transition that has taken
place over several months. 5
n The WTO condemned EU anti-
dumping tariffs on imports of Chi-
Xinhua/Zuma Press
nese screws, handing Beijing its
biggest legal victory yet at the Markets: A big factor
Geneva-based body. 6
behind gold’s rally?
n Indian banks need to cut lend- Buying from China. 32
ing rates and raise rates for de- Malaysian police fired tear gas Sunday to disperse 4,000 people at an opposition-backed rally against the government’s
positors to help the economy involvement in a dispute over drinking water. Police said 48 people were arrested and being investigated for illegal
grow faster, the head of the coun- assembly. The dispute is over a proposed water-treatment plant for Selangor state, which the federal government wants
try’s central bank said. 6 built. The opposition People’s Alliance, which runs the state, says it has enough water to meet demand until 2019.
n Cathay Pacific CEO Tyler will n India’s attorney general asked n North Korea maintained its ahead of a new round of talks on
step down next year. He plans to the supreme court to force Dow barrage of criticism at the South that work with world powers.
succeed Bisignani as head of IATA, Chemical to pay an additional $1.1 and the U.S., saying Seoul didn’t
the global airline industry’s main billion in compensation and costs learn a lesson from the North’s at- n Spanish airports were operat-
lobby group. 21 related to an industrial accident tack last month. 5 ing at normal levels Sunday after
that killed and injured thousands a 24-hour strike by air-traffic con-
n The engine explosion on a Qan- of people in Bhopal in 1984. 23 n The Pakistani-American who trollers caused travel chaos for
tas flight is prompting new con- pleaded guilty in U.S. court to aid- hundreds of thousands of people.
cerns about pilots’ increasing reli- n The euro is at risk of losing ing the 2008 Mumbai terrorist at-
ance on cockpit automation. 21 more ground this week as the tacks identified voices of some n A British lawmaker said his
Irish Parliament votes on an aus- key conspirators in the shooting Russian assistant is facing depor-
n Google’s bid to buy local deals tere 2011 budget. 24 spree, an Indian official said. 4 tation as a suspected spy. In Depth: Oil-rig
site Groupon ended as the two
sides broke off talks. 23 i i i n An explosion caused by ille- n Japan confirmed an outbreak
inspectors left adrift
World-Wide gally stored chemicals killed seven of a high-risk bird flu but said in reform push. 16-17
n Samsung Electronics promoted people and injured 37 at an Inter- there is no evidence the disease
the chairman’s only son to presi- n Leaked U.S. diplomatic cables net cafe in southwestern China. has spread beyond chickens. 6
dent from executive vice presi- are shedding new light on the
dent. Jay Y. Lee also will retain rupture between Google and the n Iran claimed another advance n Israeli officials said a forest
his chief operating officer role. 20 Chinese government. 3 in its disputed nuclear activities fire in the north is under control.
ONLINE TODAY
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1. China’s Web Takes On a Luxury
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3. Monday, December 6, 2010 THE WALL STREET JOURNAL. 3
WORLD NEWS
U.S. cable: China did Google hack
BY LORETTA CHAO cause even though the individual’s ganda official Li Changchun and top mation Office with the oversight” of that the source disputed some of
information wasn’t verifiable, com- security official Zhou Yongkang, Mr. Li and Mr. Zhou, the cable said, the content in the cable, saying Mr.
BEIJING—Leaked U.S. diplomatic mercial retaliation by the govern- both members of the Politburo according to the report. Li did personally oversee a cam-
cables are shedding new light on the ment on Google seemed “quite pos- Standing Committee, the Chinese Attempts to get comment from paign against Google’s operations in
atmosphere of suspicion and tension sible” and was “cause for serious Communist Party’s nine-member the Chinese government and the in- China, but that he had no knowledge
between the U.S. and China sur- concern.” governing group, based on informa- dividuals named were unsuccessful. of Mr. Li having anything to do with
rounding a massive rupture between Google’s later decision to pub- Mr. Li is widely believed by ex- the hacking attacks against Google.
Google Inc. and the Chinese govern- licly refuse cooperation with Chi- perts to be at the helm of China’s Meanwhile, the New York Times
ment. nese censors did have commercial The cyber attacks on the heightened censorship regime over also said it contacted an individual
The cables, gathered by the consequences. Though many smart- the past two years, which led to pu- cited in a cable who said China’s
WikiLeaks website and published by phones running Google’s Android company ‘had been nitive actions against websites such State Council Information Office de-
news organizations, include allega- operating system are currently be- coordinated out of the State as Google and its Chinese rival livered a report to senior leaders
tions that sophisticated cyber at- ing sold in China, the world’s largest Baidu, and the shuttering of thou- this spring, saying that “through the
tacks on Google, which the company mobile market by number of sub- Council Information Office,’ sands of websites, but the specula- Google incident and other increased
publicly complained about early this scribers, some companies have dis- the cable said, according to tion hasn’t been confirmed. controls and surveillance, like real-
year, were ordered by top Chinese tanced themselves from Google this The number of people with di- name registration, they reached a
leaders. They document how China year by preinstalling on their hand- the report. rect knowledge of what is discussed conclusion: the Web is fundamen-
put growing pressure on Google sets links to the search engines of in Politburo Standing Committee tally controllable.”
over the years to censor its searches Google’s competitors, Baidu Inc. and meetings is very small, and they sel- Other cables listed examples of
within China. According to one ca- Microsoft Corp.’s Bing. tion from an unnamed Chinese dom, if ever, speak to foreign diplo- hacking attacks allegedly from China
ble, authorities may have stepped The New York Times reported source with elite family connections. mats and journalists. The New York in which information, including
up the intimidation last year by ask- that one of the cables traced cyber The attacks “had been coordi- Times said it contacted the source emails and passwords from a U.S.
ing three state-owned telecommuni- attacks on Google to senior propa- nated out of the State Council Infor- cited in the cable about Mr. Li, and government agency, were stolen.
cations companies to stop working
with the U.S. search giant.
This year, Google decided to stop
cooperating with authorities and
move its search services out of
mainland China, putting at risk its
future in the world’s biggest Inter-
net market, by number of users.
Several news organizations, in-
cluding the New York Times and the
Guardian, were given access to the
more than quarter-million cables
before WikiLeaks began making
them public late last month. The ca-
bles on Google, some of which were
published on those newspapers’
websites, were based on research
and conversations with various indi-
viduals, many by officials from the
U.S. Embassy in Beijing. Names of
sources were redacted on some ca-
bles, making it hard to assess their
credibility. Details couldn’t be inde-
pendently verified.
One cable noted that Google’s
announcement early this year that it
would stop cooperating with Chi-
nese censorship regulations “pre-
sented a major dilemma” for the
Chinese government because it
made Google more interesting and
attractive to Chinese Internet users,
like “forbidden fruit.” It also said
accusations made at the time by
Chinese authorities that Google was
working with the U.S. government
to undermine the Chinese govern-
ment were part of a strategy to “ap-
peal to Chinese nationalism.”
Another cable recorded conver-
sations with Dan Piccuta, formerly
deputy chief of mission at the U.S.
Embassy in Beijing, and unnamed
individuals about Google facing in-
creasing censorship pressure be-
cause a Politburo member allegedly
entered his name into its search en-
gine and discovered that the com-
pany’s global site is uncensored and
that Chinese-language searches in-
cluded results critical of him.
The cable said three ministries
were asked to demand that Google
cease its “illegal activities,” which it
said included providing links from
its Chinese website, which was fil-
tered at the time, to its unfiltered
global website. Google declined be-
cause it was “against company prin-
ciples.”
Google didn’t immediately re-
spond to a request for comment.
Efforts to compromise with au-
thorities failed, and an individual
whose name was omitted from the
published cable said that China had
asked telecom companies to stop
working with Google. This would be
a “hard blow” because Google was
betting heavily on mobile Internet
in China, the individual said.
The cable recommended a “high-
level” U.S.-government response be-

4. 4 * * THE WALL STREET JOURNAL. Monday, December 6, 2010
WORLD NEWS: ASIA
Mumbai-attack organizers identified
BY AMOL SHARMA Mr. Headley’s interrogation in early Pakistan has been unable to identify related charges. catch all the Sajid Mirs you’ve got in
June and other evidence was sub- these people, whom Mr. Headley He acknowledged attending Pakistan, match the voice transcript,
NEW DELHI—David Headley, the mitted to Pakistan this summer to likely knew by pseudonyms. training camps in Pakistan operated and you’ve got your guy.”
Pakistani-American who pleaded further the country’s prosecution of Pakistan’s government has by Lashkar-e-Taiba and conducting Under a plea deal, the U.S.
guilty in U.S. federal court to aiding those responsible for the deadly strongly denied having any role in surveillance of several Mumbai tar- agreed not to extradite Mr. Headley,
the 2008 Mumbai terrorist attacks, rampage in Mumbai, in which 10 the Mumbai attacks. The govern- gets ahead of the attacks as well as a decision that has made it more
identified voices of some key con- gunmen killed more than 160 people ment has charged seven people in helping co-conspirators find landing difficult for India and Pakistan to
spirators in the gruesome shooting at some of the city’s top tourist its Mumbai investigation, including sites in Mumbai for attackers arriv- use his testimony to help prosecute
spree, a top Indian official said. spots and hotels. But Pakistan is members of Lashkar-e-Taiba, but ing by sea. those whom he identified as respon-
Indian investigators played intel- making “no progress” despite In- their trials haven’t started. Indian Mr. Pillai said Mr. Headley’s in- sible for supervising the attacks. Mr.
ligence phone intercepts for Mr. dia’s leads, Mr. Pillai said. officials have been frustrated at terrogation revealed a “sophisti- Pillai said the U.S. made that deci-
Headley during an interrogation this “I don’t think they’re going to do what they see as stalling tactics, a cated command-and-control” net- sion “unilaterally” and “without
year, said the official, Home Secre- anything about it,” Mr. Pillai said, work that orchestrated the attacks. consulting either India or Pakistan.”
tary G.K. Pillai. The U.S. made Mr. adding that he believes that Paki- Each of the handlers he identified As a result, he said, Mr. Headley’s
Headley available to Indian officials stan’s moves so far to advance the Mr. Headley’s interrogation on the tapes was responsible for a statements can’t be used in Indian
for questioning in Chicago in early case are a “facade” and that it isn’t different target—one for the Taj or Pakistani courts, though his iden-
June. India had pressed for access pursuing the people in the “control revealed a ‘sophisticated Mahal Palace hotel, one for the Cha- tification of Mumbai planners on
to him on U.S. soil because his U.S. room” who orchestrated the attacks. command-and-control’ bad Jewish community center and voice recordings has furthered In-
plea deal barred his extradition. He said Pakistan is wary of cracking so on. dia’s investigations into the attacks.
Mr. Pillai said in an interview down on top militants, for fear they network, Mr. Pillai said. Among the names India turned Mr. Pillai said it was a “sovereign
that Mr. Headley was able to iden- will “sing” and implicate Pakistani over to Pakistan was Sajid Mir, who decision of the U.S.” to make a deal
tify three out of four Pakistan-based government officials in the attacks. India believes was one of the mas- with Mr. Headley.
“handlers” for the attacks in those “They just can’t do it,” he said. major reason attempted peace talks terminds of the Mumbai attack as a A spokeswoman for the U.S. em-
recordings. Mr. Headley told investi- Abdul Basit, a spokesman for between the nuclear-armed rivals top official in Lashkar-e-Taiba. The bassy in New Delhi declined to com-
gators he personally had two han- Pakistan’s foreign ministry, said In- haven’t got off the ground this year. intelligence intercepts India has ment. In June, U.S. Ambassador to
dlers, one from the militant group dia this summer gave Pakistan the Mr. Headley, the 49-year-old son turned over to Pakistan are strong India Timothy Roemer said India
Lashkar-e-Taiba, which India be- names of six Pakistani nationals, in- of a Pakistani diplomat and an evidence of Mr. Mir’s role, Mr. Pillai and the U.S. enjoyed “superb coop-
lieves carried out the attacks, and cluding two people believed to be American woman, was arrested by said. He said he has told Pakistani eration” in the questioning of Mr.
one from Pakistan’s spy agency, the serving or former military officers, U.S authorities in October and officials, “I’ve given you the photo- Headley in Chicago.
Inter-Services Intelligence. who Mr. Headley said were involved pleaded guilty in March in a Chicago graph, I’ve given you the voice tran- —Tom Wright contributed
Mr. Pillai said information from in the Mumbai attacks. But he said federal court to several terrorism- script, the guy is in Pakistan. You go to this article.
India deals face environmental reckoning
BY GEETA ANAND forested area of the country,” he
said in an interview. “It is true that
NEW DELHI—Jairam Ramesh, In- where you stand depends on where
dia’s environment minister, will you sit.”
make a decision in the next week Political observers say Mr.
that could define the country’s fu- Ramesh can afford to stand against
ture: whether to approve a $12 bil- some of India’s top politicians and
lion steel plant, the largest potential industrial houses because he has the
foreign direct investment on the support of India’s two most power-
subcontinent. ful people—Sonia Gandhi, president
The plant, proposed by South of the ruling Congress party, and
Korea’s Posco, has been in the her son, Rahul Gandhi, a party offi-
works for years. It has been cleared cial who is viewed as India’s future
by the environment ministry, which prime minister. Mr. Ramesh ac-
Mr. Ramesh runs, and endorsed by knowledges this backing. Others be-
Sanjit Das/Panos for Wall Street Journal
the prime minister’s office. lieve he derives strength from an
But Mr. Ramesh shocked the po- image of honesty and transparency
litical and industrial establishment in a political system better known
here in August by publicly putting for corruption and cronyism.
the project on hold while he investi- Says Mr. Sahgal, the environmen-
gated reports that the rights of peo- talist: “Jairam is neither a hero nor
ple living in the forest had been vio- a demon, he’s just an ordinary guy.
lated. Two committees he appointed Indian politicians have fallen to such
to look into the matter have con- a low that an ordinary guy looks like
cluded that Posco broke environ- a hero.”
mental laws and failed to obtain the Indian Environment Minister Jairam Ramesh has held up billions of dollars in deals he says flout Indian laws. Mr. Ramesh sees Posco as his
go-ahead for development from for- most contentious decision.
est dwellers, as required by law. India’s environmental regulators when this enforcement is layered on environment and forestry in 2009, From the start, some local resi-
Now, Mr. Ramesh must decide have acquiesced to industry desires. top of India’s legendary bureaucracy Mr. Ramesh promised in his first dents opposed selling their land to
whether this merits killing a mas- He views it as his job to restore the and labyrinthine land-acquisition speech to expedite decision-making Posco, and at one point barricaded
sive infrastructure project. balance and to ensure that India’s process, infrastructure development on major development projects and off their village. The company
“If the minister of environment sensitive environment, and those has come to a virtual standstill. remove corruption from the process. seemed to be moving toward resolv-
and forests is not going to imple- who live off the land, don’t pay too Shashi Ruia, managing director “I was really scared when I heard ing its land-acquisition issues when
ment the laws that are the acts of big a price for industrial expansion. of Essar Group, a conglomerate that that,” said Bittu Sahgal, editor of Mr. Ramesh stepped into the fray in
Parliament, what is he going to do?” This year, Mr. Ramesh has chal- owns one of the coal-mining proj- Sanctuary Magazine and one of In- August. He told the company to hold
Mr. Ramesh said in a November in- lenged plans to replace Mumbai’s ects rejected by Mr. Ramesh, re- dia’s most outspoken environmen- off on further land acquisition until
terview in his office, one of several airport, blocked the damming of a cently drew attention in a speech to talists. he reviewed whether forest dwell-
conversations with The Wall Street northern river to supply water to the fact that India is far behind But Mr. Ramesh says he began ers’ rights and environmental laws
Journal. Mr. Ramesh, 56 years old, New Delhi and turned down eight China in infrastructure develop- reviewing the files of major projects had been violated.
has had a large hand in determining coal-mining projects backed by the ment. China produced 567 million and found many were blatantly A Posco spokesman declined to
the nation’s industrial development, prime minister’s office. tons of steel last year, to India’s 56 flouting environmental and forest comment because the project is be-
as almost all big projects require his He withdrew approval for million tons, according to the World protection laws. “The approach was fore the ministry. It said in a recent
approval. His critics say that in 17 Vedanta Resources PLC’s massive Steel Association. To close the gap, that laws are like gods and god- press release that it had been trying
months in office, he has veered too project to mine a key ingredient in Mr. Ruia said, “Government needs to desses—do ritual obeisance to them for five years to comply with all
far in an anti-business direction, aluminum, saying the company had get out of our way.” and don’t take them seriously,” he statutory requirements.
crushing many of India’s largest in- failed to obtain the consent of forest Mr. Ramesh doesn’t have an en- said. “The laws were seen as nui- Mr. Ramesh said social activists
frastructure projects, which even his dwellers in the area, violating the vironmental background. He gradu- sances to be navigated around.” and political leaders sent him evi-
own political leadership considers forest protection law. The London- ated from the Mumbai branch of the In a U-turn from his time at the dence that Posco hadn’t obtained
vital to keep India growing. based conglomerate had already in- prestigious Indian Institute of Tech- power ministry, he sent the eight the forest dwellers’ consent to the
India needs such projects to vested $5.4 billion in building a fac- nology before getting a master’s de- coal-mining project files to the project.
maintain economic growth, pro- tory nearby to be supplied by the gree in public management at Pitts- prime minister’s office with a note That would put Posco in clear vi-
jected at 8.5% this year. Otherwise, now unapproved mine. Vedanta has burgh’s Carnegie Mellon University. explaining that he couldn’t in good olation of the law, Mr. Ramesh said,
the nation of 1.2 billion will struggle denied any improprieties in connec- After a year at the Massachusetts conscience approve them because of and would make his decision clear.
to move hundreds of millions of tion with the mining project. Institute of Technology in a doctoral the environmental cost, he said. But he said he must also weigh the
people from subsistence farming to Many of his critics agree that Mr. program, he returned to India in In his earlier job, his aim was to importance of the project to India’s
productive industrial jobs, as China Ramesh is technically correct in 1980 to join a government advisory develop one of the country’s richest future. “I must also be conscious of
has done in the past two decades. finding project after project in vio- board on energy. coal deposits, he said. “I did not re- the growth imperative and foreign
Yet Mr. Ramesh says for too long lation Indian laws. But they say that Elevated to the job of minister of alize they were in the thickest, most policy objectives,” he said.