CONFIDENTIAL
Economic and Commercial Issues
3.
I suggest that our aim here should be to pursue a twin track approach: to take all the advantage we can of the increasing opportunities in this market as the Japanese continue to open up - Opportunity Japan is the epitomy of this with its target of doubling our exports to £3 billion a year within 3 years ending in December 1990; and to press the Japanese in concert with the Americans and other Western Community countries to move further and faster on structural issues which threaten the open world economy.
World Economic Management
At
4. Our main objective will be to convince the Japanese Government, despite its electoral difficulties, to press forward with structural reforms (distribution, prices, land taxation, agriculture) in order to reduce its trade surpluses and prevent the latter becoming a threat to the world trade system. This will be the main theme of the Prime Minister's speech to the Japanese private sector organisations and also a priority topic for her discussion with Mr Kaifu, as well possibly with other LDP politicians during the second half of her visit. On the specific structural issues, the Americans are taking the lead in negotiations with the Japanese in the "Structural Impediments Initiative". It is important to get our own posture right. present, we are the most active among the second-ranking countries, certainly among the EC, in pressing for these changes in Japan. Our locus, particularly over agricultural reform, has been our concern about the open trading system as a whole, and we have been able to show that the EC is bearing its share of necessary adjustments worldwide. Recognising that the EC and US also have tasks to perform must presentationally be part of our message to the Japanese, though in practice what we are saying is that they must convince their domestic lobbies of the need for unilateral measures by Japan. On this issue therefore we are partly in a supporting role to the Americans, partly urging the free trade case from a global perspective (especially on agriculture) and partly reminding the Japanese that Europe also has an interest in the outcome of their bilateral talks with the Americans.
World Trade Issues
5.
The Japanese may well try to get the Prime Minister to subscribe to criticisms of American protectionism as shown in Super 301 etc or seek our support in countering protectionism in EC policy towards inward investment, "reciprocity" and other alleged "Fortress Europe" type tendencies. A robust reply on the opportunities of the Single Market and defence of anti-dumping policy (which is in conformity with the GATT) will be appropriate, coupled with assurances about the UK's determination not to allow protectionist rules to be introduced by the EC limiting the freedom of beneficial foreign investment. On Super 301, the
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