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OECD. It should be a means of keeping ourselves informed of Gorbachev's intentions and of informing him of our views.
Mr. Kaifu said he wanted to see a democratic transformation of the Soviet Union. The political context in which exchange took place was very important. Kaifu was in favour of a special relationship between the USSR and the IMF/IBRD and in favour of a shadow programme. The Japanese supported technical assistance to the Soviet Union and had signed a Technical Co-operation Agreement during Gorbachev's visit in April. As regards follow up, the four international financial organisations should be asked to continue their assessment, and the 7 Summit countries should continue to exchange views at senior official level without necessarily creating a special group as such. He anticipated that the German and French leaders would argue for step-by-step synchronisation of support for the Soviet Union in the economic reform area only. Britain, the United States and Japan should stress the political context and the need for Gorbachev to achieve consensus.
The Prime Minister agreed. We also had to take account of Soviet arms expenditure and continued support for Cuba. The Soviet attitude to the Northern Islands was important in that context as well. The French and Germans might indeed argue for the grand bargain step-by-step. The Prime Minister understood that that was not acceptable to Japan or the United States. Nor was it attractive to the United Kingdom. We wanted to set in place a framework for follow up to the G7 meeting with President Gorbachev but without a commitment to resources.
Mr. Kaifu said that his thinking was similar, hence his idea that a group of officials from G7 countries could carry matters forward. Did the Prime Minister think that was not sufficient? The Prime Minister said he would need to take soundings of other colleagues. There were two attractions in widening the follow up group beyond the G7. One was that it widened the pool of available help to the Soviet Union. The second was that it might make it easier to bring the United States along.
GATT Round
The Prime Minister said that we would not solve the outstanding disagreements this week but he hoped we could agree to solve them this year, and that Heads of Government would take a personal interest. The EC needed to move on agriculture, the United States on services and intellectual property and the Japanese on rice. The Prime Minister described the dangers if no agreement was reached this year. We would not get agreement without the commitment of Heads of Government.
Mr. Kaifu agreed that we should and must settle this year. He would continue to deploy his own best efforts on market access, agriculture, intellectual property rights and services. Japan was doing lots of internal work to try and help achieve progress. It was important to have language in the economic declaration on food safety. (I was distracted from note-taking at this point by an unsuccessful search to find the relevant
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