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MDHIAN 975%
AGRICULTURE STANDS OUT AS THE AREA WHERE JAPAN NEEDS TO CONTRIBUTE SOMETHING TO ACHIEVE A SUCCESSFUL OUTCOME, AND WHERE MARKET PRINCIPLES NEED TO BE MORE RIGOROUSLY APPLIED. WE DO NOT THINK THERE IS MUCH ON THE EC/JAPAN AGENDA TO RAISE AT PRIME MINISTERIAL LEVEL, THOUGH ON AUTOMOBILES KAIFU MAY WELL ENLIST OUR SUPPORT IN OPPOSING ANY PROPOSAL TO COUNT JAPANESE PRODUCTION IN EUROPE AGAINST DIRECT JAPANESE EXPORTS IN THE TRANSITIONAL PERIOD.
4. IT WOULD CERTAINLY BE HELPFUL TO ADDRESS BILATERAL ISSUES ALBEIT BRIEFLY. GIVEM THE SHORT TIME I SUGGEST THAT
THE PRIME MINISTER SHOULD FOCUS ON FIVE POINTS:
(A) TSE. THE PRIME MINISTER WILL BE ABLE TO NOTE WITH APPROVAL THE DECISION OF THE TOKYO STOCK EXCHANGE TO ADMIT 10 NEW MEMBERS BY AUTUMN NEXT YEAR, WE SHOULD KNOW BY THE TIME OF THE MEETING THAT THE TWO OUTSTANDING BRITISH APPLICANTS HAVE BEEN INVITED TO APPLY. KAIFU MAY RESPOND WITH REFERANCE TO THE ASPIRATIONS OF JAPANESE REGIONAL BANKS IN LONDON. I SUGGEST THAT OUR RESPONSE ΤΟ THIS SHOULD BE WELCOMING IN GENERAL BUT CAUTIOUS ON SPECIFICS.
(B) OPPORTUNITY JAPAN. WE ARE JUST ABOUT ON COURSE FOR OUR 1990 TARGET OF #3 BILLION IN EXPORTS (AFTER AN INCREASE OF 30% THIS YEAR) BUT WE ARE LOOKING FOR CONTINUED SUPPORT FROM THE JAPANESE GOVERNMENT FOR OUR EFFORTS. OUR EXPORT DRIVE WILL NATURALLY CONTINUE BEYOND THE INITIAL 3 YEARS OF THE CAMPAKGN: WE NEED SOME
BIG-TICKET SALES.
(C) INWARD INVESTMENT.
THE PRIME MINISTER MAY WISH
TO NOTE THAT INVESTMENT CONTINUES TO BE A VERY SUCCESSFUL PART OF OUR BILATERAL RELATIONSHIP. BUT IT HAS ALSO PROMPTED SOME COMPANIES TO THINK THEY SHOULD INVEST IN OTHER EUROPEAN COUNTRIES ON POLITICAL GROUNDS, EVEN THOUGH COMMERCIAL FACTORS MAY STILL FAVOUR THE UK. WE HOPE THE GOVERNMENT WILL ENCOURAGE JAPANESE COMPANIES TO TAKE THEIR DECISIONS ON PURELY COMMERCIAL GROUNDS, AND BEAR IN MIND THAT THE UK HAS BEEN MOST CONSISTENT IN ITS WELCOME FOR JAPANESE COMPANIES, AND HAS A VERY GOOD LABOUR SUPPLY
AND INFRASTRUCTURE TO OFFER.
(D) UK 90. THE PRIME MINISTER MIGHT REFER BRIEFLY TO HER AND KAIFU'S CO-PATRONAGE OF NATIONAL CULTURAL
FESTIVALS.
(E) AIR SERVICES. WE SHOULD REGISTER OUR SERIOUS DISAPPOINTMENT AT JAPANESE FAILURE EVEN TO RESUME TALKS WITH US ON INCREASING TRUNK ROUTE CAPACITY AND LIBERALISING
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