TNAG-2346-FCO40-3415-Political-relations-between-Hong-Kong--Japan-and-China-1991 — Page 136

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MADE A STRONG PITCH FOR PROGRESS ON THE URUGUAY ROUND AND THE LIBERALISATION OF AGRICULTURAL TRADE, NOTING THE COST CONSUMERS IN DEVELOPED COUNTRIES AND THE PENALTIES TO PRODUCERS IN DEVELOPING ONES. KAIFU MENTIONED JAPAN'S HIGH IMPORT RATIO, THE IMPACT THAT LIBERALISATION WOULD HAVE ON NEXT YEAR'S UPPER HOUSE ELECTIONS AND, NOTING EUROPEAN AND US RESTRAINTS ON AGRICULTURAL TRADE, CONCLUDED THAT JAPAN'S DECISION WOULD BE TAKEN IN THE CONTEXT OF DECISIONS BY ALL CONCERNED.

3. THE LUNCH DISCUSSION WITH NAKAYAMA WAS WIDE RANGING, BUT ADDED LITTLE NEW. THERE WAS A LENGTHY EXCHANGE ON THE SOVIET UNION. NAKAYAMA NOTED THE SIMILARITY OF THE JAPANESE AND UK POSITION ON ASSISTANCE. IT WAS NECESSARY TO GET THE SOVIET ECONOMIC FRAMEWORK IN PLACE FIRST. SOME SORT OF SPECIAL RELATIONSHIP WITH THE IMF WOULD BE HELPFUL. ON HONG KONG AND CHINA NAKAYAMA SAID THAT HE HAD ALREADY MADE THE POINT ABOUT ECONOMIC INDEPENDENCE. HE AGREED WITH SIR GEOFFREY THAT IT WAS HARD TO MAKE THE CHINESE UNDERSTAND THE IMPORTANCE OF CONFIDENCE IN A MARKET ECONOMY. ON AGRICULTURE AND BIG TICKET ITEMS MUCH THE SAME GROUND WAS COVERED AS WITH THE PRIME MINISTER, BUT SIR GEOFFREY DID ENLARGE ON OUR CONCERN AT THE GROWING BILATERALISM OF US-JAPAN TRADE SETTLEMENTS AND THE FAVOURABLE IMPACT THAT ORDERS FOR BIG TICKET ITEMS WOULD HAVE IN THE UK AND EUROPE. HE SPECIFICALLY MENTIONED OUR INTEREST IN AERO- ENGINES, THE BAE 125 AND ROLLS ROYCE GAS TURBINES. THERE WAS ALSO A DISCUSSION ABOUT THE EC DECLARATION IN WHICH SIR GEOFFREY SAID THAT WE WERE LOOKING FOR A BROAD POLITICAL STATEMENT ABOUT OUR RELATIONSHIP. NAKAYAMA AGREED.

4. AT THE JIIA THE DISCUSSION OF FOREIGN POLICY ISSUES WAS MOSTLY ON FAMILIAR LINES BUT SIR GEOFFREY WAS ABLE USEFULLY TO UNDERLINE THE THEMES OF BRITAIN'S SUPPORT FOR POLITICAL DIALOGUE WITH JAPAN, OUR OPPOSITION TO FORTRESS EUROPE AND THE NEED FOR JAPAN TO MAKE CONCESSIONS ON RICE IN ORDER TO HELP THE URUGUAY ROUND TO SUCCEED. ON THIS POINT, IN ANSWER TO A LENGTHY INTERVENTION ARGUING IN FAVOUR OF JAPAN'S NEED FOR FOOD SECURITY, SIR GEOFFREY ASKED WHY A SIMILAR ARGUMENT DID NOT APPLY TO OIL SECURITY. AND WOULD JAPAN BE SYMPATH- ETIC TO A EUROPEAN ARGUMENT FOR AUOMOBILE SECURITY. IN HIS SPEECH THE THE JAPAN INVESTMENT MANAGEMENT FORUM SIR GEOFFREY SPOKE AT LENGTH ABOUT THE DEVELOPMENT OF EMU AND THE INEVITABILITY OF A COMMON CURRENCY. THIS WOULD POSE A CHALLENGE TO BOTH THE DOLLAR AND THE YEN.

SINGNED:- E J FIELD

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