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problem following the quad talks. Differentials between taxation of foreign and domestic whiskies had also been removed in 1989. The Prime Minister pointed out the 1987 GATT panel ruling had still not been fully implemented. He hoped that tax reform would form part of the new government's deregulation plans.
Third Country Cooperation
8.
Mr Hosokawa said that one of the impediments to world economic growth was low consumption capacity worldwide. One potential area for UK/Japan cooperation might be to increase the purchasing power of Asian countries such as India and China. The Prime Minister said that he welcomed this idea. There was already a certain amount of cooperation in third countries, for example over infrastructure projects. There was also scope for closer cooperation in the aid field. Perhaps officials should be asked to examine this idea in more detail and to consider whether there were any areas where practical cooperation was possible. might be worth commissioning a paper which could be discussed at
Indeed it the UK/Japan Conference in January.
Science and Technology
9.
Mr Hosokawa suggested that there might also be scope for closer cooperation in the S and T field. The Prime Minister said the fact-- we now had a Cabinet Minister with special responsibility for science showed the importance we attached to science and the application of science. This was partly thanks to Japan's example: we had been impressed by the skill with which Japanese industry had applied scientific developments and recognised that science and technology would increasingly underpin economic performance. skills were complementary. The UK had very good skills in basic science. Japan's ability to apply those skills was second to none. We would be very happy to pursue the Japanese suggestion of a bilateral S and T agreement.
Political reform
Our
10. Mr Takemura said that the UK/Japan relationship was the linchpin of Japan's relations with Europe. Japan would like to see the relationship develop even further. History showed that whenever Britain and Japan were friends, all was well with the world, but when we fell out, things went wrong more widely. The UK was the world's oldest democracy and Japan had a lot to learn from us. He had not heard much talk of electoral reform in the UK. Was there any possibility of this kind of debate developing in the UK? The Prime Minister explained that he did not anticipate any significant constitutional reform in the UK for the forseeable future. There would be no parliamentary majority for moving away from the present electoral system. However, there was one area in which we were engaged in reform and that was the Citizen's Charter, which was designed to protect the rights of the citizen in dealings with the government or semi-governmental bodies which enjoyed monopoly powers. The reform process was still in its infancy but would grow over the next few years. We would be happy to provide
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