TNAG-1876-FCO40-2667-Relations-between-Hong-Kong-and-Japan-1989 — Page 19

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FM TOKYO

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TELNO 1172

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How Healy MHED Francis Baker, A Down By

YOUR TELNO 996: VISIT OF JAPANESE PRIME MINISTER

1

·

YOUR PROPOSED MENU SEEMS TO COVER THE GROUND ADMIRABLY. AS YOU IMPLY, THERE IS UNLIKELY TO BE

SUFFICIENT TIME TO DEAL IN DETAIL WITH ALL TOPICS. I ASSUME THAT EAST/WEST ISSUES WILL BE A MAJOR SUBJECT. KAIFU WILL HAVE JUST VISITED BERLIN, AND MADE A MAJOR SPEECH THERE AND HE WILL PRESUMABLY HAVE FURTHER JAPANESE ASSISTANCE TO OFFER

ANOTHER MAJOR TO POLAND AND HUNGARY WHEN HE GOES ON THERE. SUBJECT WILL BE CHINA/HONG KONG/VIETNAMESE BOAT PEOPLE. THE JAPANESE CONTINUE TO BE HELPFUL ON HONG KONG AND ARE QUIETLY SUPPORTIVE OF OUR POSITION ON VIETNAMESE BOAT PEOPLE: THEY MIGHT BE CAREFULLY URGED TO COME OUT MORE OPENLY (ALTHOUGH THEY ARE OBVIOUSLY SENSITIVE TO US VIEWS). KAIFU, ON THE OTHER HAND, MAY WANT TO PRESS THE PRIME MINISTER THAT THE TIME IS NOW RIGHT FOR THE WEST TO SOFTEN ITS POSITION ON CHINA (MY TELNO 1155).

3.

ECONOMIC ISSUES. THE MAIN ISSUE CONFRONTING THE JAPANESE IS THEIR RELATIONSHIP WITH AND THREAT OF PROTECTIONISM FROM THE UNITED STATES (MY TELNOS 1123 AND 1156). THIS IS LINKED IN SOME WAYS TO THAT OF THE URUGUAY GMUND AND STRUCTURAL REFORM (MY TELNO 1132). IT WOULD BE HELPFUL IF THE PRIME MINISTER COULD EXPRESS OUR CONCERN THAT, FOR THE SAKE OF THE OPEN TRADING SYSTEM AND WESTERN SECURITY, THIS IMPORTANT RELATIONSHIP CONTINUES TO BE MANAGED SUCCESSFULLY. THE JAPANESE MAY RESPOND THAT A PRIOR CONDITION IS ACTION BY THE AMERICANS TO REDUCE THEIR BUDGET DEFICIT AND DEAL WITH ISSUES OF INDUSTRIAL COMPETITIVENESS. WHILE THIS IS AN IMPORTANT PART OF THE SOLUTION AND ACTION BY BOTH PARTIES IS ESSENTIAL, WE SHOULD TAKE ADVANTAGE OF KAIFU'S PRESENCE TO PRESS THE JAPANESE ON THE NEED TO GO MUCH FURTHER AND FASTER ON STRUCTURAL REFORM ON THE LINES OF THE PRIME MINISTER'S SPEECH HERE IN SEPTEMBER: TO INCREASE FURTHER THE CONSUMPTION OF IMPORTED GOODS AND INCREASE COMPETITION AND TRANSPARENCY IN BUSINESS DEALINGS. IN THE GATT ROUND ·

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