CONFIDENTIAL

EC Integration

Kaifu is likely to ask about developments towards EC integration. There have been some recent signs that Japanese concern over UK attitudes towards the Community

is discouraging inward investment (a report on NEC's

strategy in Europe is being submitted separately). The

Prime Minister may wish to say that:

The UK continues to play an influential role in

the Community: the UK has led the way on 1992, which

remains the core of the current agenda.

- Our ideas have also been instrumental in making

the debate on political union more practical,

focussing on the balance between Community and

national institutions.

We shall be pursuing vigorously our recent

proposals on EMU, which are widely recognised as a

positive and serious contribution to the IGC

preparations.

-

UK remains the best location within the EC for

Japanese investment. Japanese companies already

here have been very successful. We would welcome

more.

UK-Japanese Relations

The Japanese have asked to discuss our bilateral

CONF IDENTIAL

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