CONFIDENTIAL
Britain remains the preferred base in Europe for Japanese investment. Japanese figures report that investment in Europe rose 70% to $14 billion in 1989/90. $5.24 billion came to the UK. But our continued pre-eminence in the longer term depends upon the Japanese recognising that our voice counts in the EC. They remain concerned about the idea of "Fortress Europe" after 1992, and there are worrying signs that high labour costs within the Community and oppressive local content rules may in the future deflect some potential Japanese investors to bases in South-East Asia. We need to make clear to the Japanese that we are committed to an open, liberal trading community in Europe and that our reservations about the more ambitious schemes for economic and political union do not represent any lessening of commitment to the Single Market. I shall be making these points forcefully in a speech to the Keidanren. I shall also be encouraging the Japanese to buy more British products, particularly British aerospace products, in the context of reducing the wider trade imbalance;
4.
Japan's view of the need not to isolate China makes her our closest ally among the G7 on this issue. Their decision, after Houston, to resume concessional finance places them in a more influential position vis-a-vis China,than any other Western country. They are also the
Foreign largest Investor in Hong Kong. We need to engage Japanese energies to use their special position to encourage the Chinese further down the road of reform, and towards behaviour that will restore Hong Kong's confidence in the future.
The agenda for my talks with Nakayama is of course bound to be headed by latest developments in the Iraq/Kuwait crisis; one cannot predict exactly what we shall want to concentrate on then. The Japanese are still not sufficiently confident of their new independent political voice to act on their own in this area without being prodded by us or the Americans - but their relative promptness in freezing Iraqi assets and imposing a trade embargo certainly compares well with their havering at the time for the Iran hostage crisis in 1979. There is much that they can do to provide financial assistance in the Gulf region, not least for those countries whose economies are suffering, like Jordan. I shall encourage them to do so. Nakayama will himself have just returned from visits in the area and will have no doubt formed his own ideas.
6. We shall also cover East-West developments, and I can brief them on what I expect from the Moscow visit. For their part, the Japanese are still obsessed by the Northern Territories, which prevents better relations with the Soviet
T12AEL
CONFIDENTIAL.
We also have a
не
joint interest in promoting
which will be bidding
Anglo | Japanere consorticem
| for a substantial contract cw port
strategy.
in Hey Kong's huge replacement
No comments yet.
Private notes are available after approval.