TNAG-0299-FCO40-335-Entitlement-of-Hong-Kong-to-generalized-tariffs-preferences--1971 — Page 18

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CONFIDENTIAL

Mr Bottomley suggested that the liberalisation of

inward investment though desirable in itself might work

against the reduction of the surplus. Mr Hira hara

recognised this but pointed out that apart from the

problem of the balance of payments itself, this measure

would go some way to counter accusations that Japa_n

had profited from the open markets of the world without

opening her own. Mr Bottomley asked whether these

measures would in fact produce a situation appropriate

to a large balance of payments.

Sir J Pilcher

thought that fundamentally the difficulties of the

Japanese could best be remedied by the introduction of

the habit of the siesta and the five-day week.

+

Mr. Bottomley thought that trade union practices might

also have some bearing on the problem.

•

Japan and the UK both

Mr. Rawlinson thought that it would be helpful if

Japan could take a positive attitude to discussions in

the International Monetary Fund about the modernisation

of the Bretton Woods system.

regarded the Bretton Woods system as helpful and wanted

to me serve it. It had however not been working very

well and it would be useful to look at the possibility

of minor adjustments. It was not for us to press for

changes in the parity of the Yen, but a main difficulty

in the present system was the American deficit and

Japan's success had contributed to this. We welcomed

Japanese measures of liberalisation but as long as the

rapid accumulation of reserves in Japan continued

people would think that the Yen was a currency that the

Bretton Woods system suggested should be revalued.

Mr Sanders thought that if any currency was under-

CONFIDENTIAL

/valued