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4. M said that if we could see our way to meeting the Japanese on these two points, the rest could be solved. He repeated that he saw great value in the agreement and in its signature now.
5.
I said that this matter was under intensive study in London. It was wrong to imagine that a decision against signature had been taken. But we were practical people, and this was perhaps especially true of the Prime Minister. She would not want to put
to a document with no substance in it. But I took note
of M's points.
6.
M then spoke about aircraft, both civil (eg BAe 146) and Military. It would be very difficult for the Japanese government to give concrete favourable reactions on these points, because they were for private enterprise and because the Lockheed case had made aircraft a very sensitive subject in Japan just at the moment. President. Mitterrand had pressed for progress on Airbus during his own visit to Tokyo, but Suzuki had declined. He was very sensitive about the political repercussions.
If Mrs Thatcher were
to mention aircraft, she could not expect a favourable reaction. Any proposals could be studied, but the Japanese position would not be easy to express in a concrete way.
7. I said I found this line disappointing. As regards defence equipment, it would be perfectly normal for the Prime Minister to speak about what Britain had to offer. We were manufacturers and exporters on a substantial scale and had recently had an opportunity to test some of our equipment in war conditions. We knew the figures for Japanese imports of defence equipment and would like to see them higher. Similar considerations applied to civil aircraft and equipment. What was the difficulty?
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8. M said that aircraft were the particularly sensitive aspect, for the reasons he had given. Japan was increasing her Air Force equipment, and could be expected to do likewise with defence equipment of other sorts. This could be studied, and the subject could be discussed during the Prime Minister's visit. But the Japanese Defence Agencies would be shy of giving commitments in advance of the defence budget, so their attitude would be cautious. M would report my remarks back to Suzuki, together with any specific proposals we might want to make. I said we would see if we could send him a list.
9. As to whisky, M said it would be extremely difficult, indeed practically impossible, to take a further step in tarrif reduction as this stage. The experts in Tokyo maintained that the tarriff represented only three per cent of the retail price.
If it were reduced further, this would create a precedent for other products, eg brandy and wine.
10. M said that the problem on chocolate and biscuits was a political one: the Japanese manufacturers were strongly opposed to any reduction in tarriff. M had asked Suzuki if he could not show political leadership on the matter. Suzuki had replied that if a change in the tarriff on these items would give great satisfaction to the British Prime Minister, he was ready to exert his influence in that direction. But if it was only a matter of lesser importance, .or of 'better than. nothing', Suzuki would not wish to risk stirring up strong political opposition.
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11. I registered a bit of impatience. I said that we were concerned about very large questions such as the level of Japanese imports of manufactured goods by comparison with comparable countries; the existence of tarriff and non-tarriff barriers; the exchange rate for the yen; and the statistics of Anglo-Japanese trade. M should not imagine that the British point could be met by a few biscuits, or that a reduction in the Japanese tarriff on chocolate would be something for which Britain was ready to pay a substantial price. The Prime Minister would not wish it to be said at the end of her visit that Japan had retained her freedom to continue to destroy whole sectors of British industry, as some people would say that she had already destroyed ball bearings, zip fasteners and motor cycles, while Britain had gained the right to sell a little more confectionery. The problems were large and the remedies needed to be serious also.
He
12. M responded with a lecture on inevitable lines. Did the Prime Minister intend to raise the subjects now under discussion between Japan and the Commission under Article 23 of GATT? gathered that the Commission was dissatisfied with progress. Japan believed that these consultations were useful for exchanging views but would not lead to helpful conclusions. On the contrary: if heated discussions continued, the general atmosphere would become counter-productive. The key to the question of Japan's imports lay in the competitiveness of foreign manufactured goods. The question of trade balances could not be considered on a purely bilateral basis. It would not help to discuss these matters theoretically or in general terms. It would be better to tackle the problems one at a time, eg chocolate and biscuits. If the Nissan project could be realised, that would make a big contribution. World economic recovery would help, but the difficulties could not be solved all at once. Meanwhile Japan was striving to open her markets more and more. If the British side had concrete obstacles which we could draw attention to, Japan would use her best endeavours to see how these could be tackled. I said we might wish to send M a list.
Political Questions
13.
M said thaSuzukjould be in China almost immediately after the Prime Minister. He would be glad to talk to her about this subject. He was much interested in the problem of Hong Kong and would be very ready to help in any way Britain thought might be useful.
14. M said he was aware of British disappointment and dissatisfaction with Japan's attitude during the crisis on the Falklands. He was among the many in Japan who admired what Britain had done there. Argentina had taken the unlawful act and should carry the blame for this. But because of Japan's relationship with Argentina, and for general reasons, she took the view that this or any dispute should be settled by peaceful means. Hence the Japanese vote in the Security Council. What would be the British approach during the next phase?
15. I said I had been in Versailles on the night in question, and disappointment and dissatifaction were not too strong words for the mood in the British delegation. We were now looking at the future,
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and might want to be in touch with the Japanese, eg about the handling of resolutions in the UN General Assembly.
16.
I said that this episode might not have occurred if we could have found a way of intensifying political consultations. Many possibilities had been mentioned, some bilateral (eg regular meetings between the Foreign Minister of one country and the Ambassador of the other, with instructions from capitals and a pre- arranged agenda), others multi-lateral (eg institutional backing for the economic Seven, more meetings between Japan and the Ten, etc.). This was the direction in which we wanted to move, and we were ready to put substantial effort into it. I accepted a suggestion from M that these points could well come up during the talk between the Foreign and Commonwealth Secretary and the Japanese Foreign Minister on 3 September.
17. Finally, M asked about the transatlantic differences over the Siberian. pipeline. Japan assumed that neither the American nor the European side wanted to widen the rift, which carried risks of damage to the West as a whole including Japan. M recalled that the oil pipeline project in Sakhalin provided for the use of American equipment, now banned. Japan had filed a protest and asked the United States to reconsider its attitude. Was there a risk of the disagreement spreading, eg to the security field?
18. I said I thought that this last possibility could be excluded, and indicated the lines on which we were currently working with a view to containing the problem without surrendering our view that the American action had been wrong in principle and misguided in practice.
J L Bullard
2 September 1982
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