4. Mr. Ohira said that he personally fully appreciated the
significance of the British proposals. If agreement could be reached on the basis which the British side had suggested, Britain would be the first country in Europe which would completely eliminate any element of discrimination in her trade relations with Japan. He was, therefore, determined to work for a successful outcome. His visit to London had given him a new realisation of the symbólic importance of certain sensitive items on the British request list. These sensitive items had yet to be discussed by Japanese Ministers, but it was only fair to say that several of them raised considerable difficulties for the Japanese Government. On the question of whisky he had already had a personal discussion with the Minister of Finance,,but he could not promise that any concession would be possible.
5. The President said that he was very encouraged to know that Mr. Ohira fully supported our approach. ile recognised that it was necessary to proceed step by step in these negotiations, but there were still important gaps in the Japanese response to our proposals and we would hope for a more. favourably reply after Mr. Ohira's return to Tokyo. For our part we thought that it would be helpful to provide Mr. Ohira with a note clarifying certain points in our position (a copy of this note is attached).
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6. Mr. Ohira said that he would study this paper carefully. He noted, however, that although on many points the ball was in the Japanese court, on the issue of the Safeguard Clause, the Japanese side were still awaiting a response to their proposals. The President undertook to study this issue carefully and it was agreed that negotiations as a whole should be pursued in further discussions between officials. Non-Cotton Textiles
7. The President said we had been glad to know that the Japanese Government were continuing to resist U.S. demands for bilaterally agreed restraints on trade in non-cotton· textiles. We were sure that Mr. Ohira appreciated that if such restraints were to be accepted the prospects of liberalising Anglo/Japanese trade on the lines of our proposals would be seriously damaged and the attitude of the EEC to the liberalisation to their trade with Japan would doubtless also be affected.
8.
Mr. Ohira replied that the Japanese Government fully appreciated the significance of this issue and were, therefore,
moving very cautiously. In their view the United States' industry was very prosperous as production, sales and employ- ment all seemed to be increasing. A Japanese fact-finding mission had recently visited Washington and the Ministry of International Trade and Industry were now studying the data' which they had collected, but so far there had been no evidence, that imports were threatening to causo serious injury to the U.S. Industry. The Japanese textile industry played a very important part in the Japanese economy and about 9 million people depended on it for their livelyhood. The Japanese Government could not, therefore, take lightly any action which might damage the industry's interests and indeed the Japanese Diet had passed a resolution demanding that the U.S. request for bilateral measures should be resisted.
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