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ather reduction soon. The Prime Minister said that a broader, deregulatory approach was needed. There would be discussions of air services between officials in October and she hoped that progress could be made then. We had similar problems with the number of European countries. She was raising these specific issues because of her fear that, unless they were satisfactorily resolved, the pressure for a cosy bilateral arrangements which would have the effect of restricting trade would grow.
Mr. Kaifu's visit to the US, Canada and Mexico
The Prime Minister invited Mr. Kaifu to tell her about his very successful visits to the United States, Canada and Mexico.
Mr. Kaifu said that he had decided to make an early visit to the United States, because it was the leader of the free world. No other country could substitute for that role and the responsibilities which went with it. He had wanted to assure President Bush that the basic direction of Japan's diplomacy remained unchanged and that there was strong mutual trust with the United States, as with all nations which upheld the values of freedom and democracy. He had found there were those in the United States who seemed to doubt whether Japan was a real democracy and saw his country as interested in nothing more than making money. He had done his best to counteract this view. He had also met Members of Congress and found them mostly concerned with trade issues and the structural impediments' initiative. He had made clear that Japan was ready to listen to US views on this, but that Japan would also have concerns of its own to raise, for instance the problem of the US deficit and the deficiencies of American management. His task was to improve the quality of life in Japan, not at the behest of the US but for Japan's own reasons. He very much agreed with the Prime Minister on the importance of deregulation and would shortly be making his views clear in a policy statement to Parliament.
Mr. Kaifu continued that he had also visited Mexico, as the first country to benefit under the new debt reduction initiative. He thought the whole question of debt highly important, with a bearing on the future prosperity of the entire world. The Prime Minister commented that President Salinas was very sound and deserved help.
Mr. Kaifu continued that he had had also held good discussions in Canada with Mr. Mulroney, who shared his concerns about consumption tax. The Prime Minister congratulated Mr. Kaifu on the success of his visits. Her only comment on the subject of debt was that it would be grossly unfair to those countries who had borrowed little and repaid their debts promptly to agree to write off the debts of those who were more profligate.
CONFIDENTIAL
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