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The Prime Minister continued she would not run through the whole gamut of issues but mention just a few. First, we were very grateful to Mr. Takeshita for dealing with the liquor tax question. Unfortunately there seemed to be some attempt now to undermine this through the sale of whisky look- alikes. She hoped the necessary action could be taken to prevent this. Second, there was the question of additional seats for British firms on the Tokyo Stock Exchange. Mr. Kaifu was the fourth Japanese Prime Minister with whom she found it necessary to raise this issue. It was a irritant in our relations and she hoped we could now bring it to a successful solution. Thirdly, there was the question of air services, where we wanted to see much more extensive deregulation, with greater flexibility over routes, capacity and fares. The UK-Japan 2000 Group had particularly asked her to raise this issue. Fourth, there were the other structural reforms which she had mentioned in her speech, including the distribution system. She hoped all these would be pursued with vigour.
Mr. Kaifu said that he would deal with all these points frankly. He was pleased that the liquor tax issue had been resolved and that as a result sales of whisky had risen greatly. Official talks had been held on the problem presented by new spirits and he accepted that steps must be taken to ensure that whisky and new spirits were perceived as different, for instance in colour and appearance. The Japanese Government would continue its efforts on this score. He had familiarised himself with the subject of seats on the Tokyo Stock Exchange. The Government had no direct power on this matter: it was for the members of the Tokyo Stock Exchange themselves to decide. But he had talked to the President of the Stock Exchange and conveyed his personal wish that the Stock Exchange should address the issue and be as forthcoming as possible, so that he would be not only the fourth Japanese Prime Minister with whom Mrs. Thatcher had raised the issue, but also the last. The President of the Stock Exchange was well aware of the Prime Minister's interest. He recalled that on the previous occasion when membership had been enlarged, the consultations had taken about six months, following which a further six months had been necessary to complete the process of achieveing membership. The President had assured him that the further enlargement of the Stock Exchange membership had his positive support, but he needed some more time. Mr. Kaifu continued that his personal expectation was that the matter would be brought to a positive conclusion. He was very confident about this. At the Prime Minister's suggestion, an agreed form of words was worked out for use with the press. This reads:
"On the Stock Exchange, we noted that the consultative process for further enlargement has started and we both feel confident on the pattern of last time that it will be brought to a successful conclusion sometime next year."
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Turning to the problem of air fares, Mr. Kaifu said that fares from Tokyo to London had already been lowered by 12 per cent earlier this year to reduce the discrepancy between fares from Tokyo and those from London. There was to be a
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