слу
Mr Thomas
FED
TRED
FR Barratt Esq CB Deputy Secretary H M Treasury Parliament Street LONDON SW1P 3AG
Aw Rundl
METCAM:
DEPARTMENT OF INDUSTRY ASHDOWN HOUSE
123 VICTORIA STREET
LONDON SWIE 6RB
TELEPHONE DIRECT LINE 01-212-690
SWITCHBOARD 01-212 7676
Helgewall. The навутишье,
FRA
TS COPY
чил
26/2
15 February 1979
HD.
Phy
Mhesswell.
Muriburger Watson will. ID
My Lippitt recommends that we continue fright dirty. I do not think this jetter shor HONG KONG MTRC PHASE II without comment from no util drift. fuco
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Thank you for responding so promptly to the pressure on us to counter the Japanese credit manoeuvres on this contract, the outcome of which you summarised in your letter of 25 January. I have delayed replying 'till now because events were moving so rapidly.
As you know, in the event, ECGD directly matched the Japanese terms and the device of drawing the loan down on the first day and putting the money into fine securities was not employed. I recognise, however, that this approach would have been exceptional, and I have underlined this to Lazards and all other concerned. The operation was entirely successful, and the rolling stock contract was awarded to METCAM. Our speed of response has won high praise from the company and our friends in Hong Kong, and I am very grateful for your help in achieving this.
This leaves your more general point about Japanese finance credit policies. The dominant feature of Japan's trade polic has been, and continues to be, the aggressive drive to capture world market share in chosen product areas. Inthis, the manip- ulation of financing plays a key role, and their institutions trading houses, large and diverse industrial groups, and links between banks, companios, and central Government make sup! *wa U extremely difficult to detect.
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There is, therefore, a strong predatory strain in Japan's approach to credit support, though ostensibly abiding by the terms of the consensus. This particular case, and the recent "development credits" allowed for gaining access to raw material they require, are but two instances. And, under pressure, of an appreciating yen, we are likely to see these trends continue, irrespective of whatever good intentions the Japanese Gove mouth about reducing their balance of payments surplus.
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I would go along entirely with your concern, therefore, that we should take abep by em dopria megreppive arobila prekke brut. But I differ in the emphasis of what we should do about it. Certainly, let us consider how we might bring pressure to bear
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