CONFIDENTIAL

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Explain our views on the way forward on aid to the

soviet Union, and stress the need for coordination with the Japanese;

Confirm that we share Japanese views on the need to adopt a more forward-looking policy towards China, while continuing to look for an improvement in human rights performance;

Remind the Japanese that a successful Uruguay Round settlement will involve concessions on rice;

- Stress that the UK continues to play an

influential role in the EC, and continues to welcome

Japanese investment.

Assistance to the Soviet Union

The Japanese have asked to discuss this subject.

They are much more sceptical than most Western countries

about how much has been achieved under

President Gorbachev, and think that the Pacific Rim

perspective on security policy is inadequately

acknowledged by the Western Alliance. They have made

clear that they are not willing to consider financial

assistance to the USSR until the Northern Territories

issue has been resolved satisfactorily. There has been

no progress on this recently, although the forthcoming

visits to Japan of Shevardnadze (in September 1990) and

Gorbachev (in 1991) may help to move things forward.

The Prime Minister night give Mr Kaifu our views on ways in which the West might help the process of economic

It would be helpful if she could brief him on

reform.

CONFIDENTIAL

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