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INTERNATIONAL ISSUES
GATT
CONFIDENTIAL
11. The Prime Minister said that it was vital to achieve a satisfactory settlement of the Uruguay Round by the end of the year. Of course, every country had its own difficulties with the Uruguay Round. We understood France's difficulties but had warned them not to try to reopen the Blair House Accord. Action which might delay the completion of the Uruguay Round could not be tolerated. Although there would be a lot of politicking with our European partners over the next few weeks, we very much hoped it would be possible to achieve a satisfactory outcome. The Prime Minister asked about Japan's difficulties, particularly on rice. Hosokawa said that both countries must do their utmost to bring about the success of the Uruguay Round. As the world's largest importer of agricultural products, Japan had a great interest in the Blair House Accord but felt there was a lack of balance in the Dunkel paper. The rice problem was a very delicate issue but a decision would have to be taken.
Hong Kong/China
12. Hosokawa asked the Prime Minister for his views on Hong Kong and China. Japan considered it vital that Hong Kong should maintain an open system both economically and politically after 1997 and hoped that a constructive dialogue could be held between China and Britain on Hong Kong's future. For reasons of geographical proximity, Japan had to try to pursue a policy of constructive engagement. The Prime Minister explained that talks on the 1994/95 election arrangements were continuing but progress had been slow. We were determined to achieve a successful outcome but time was not unlimited. We were grateful to Japan for making clear to China that she also attached importance to the stability and prosperity of Hong Kong. The Chinese economy was badly over-heating but, given political stability, the long-term potential was huge. It would be surprising if the reform process could now be held back or reversed. Reports that China
was about to carry out another nuclear test made it difficult to persuade India and Pakistan to sign the NPT.
Russia
Russia
13. Mr Hosokawa asked the Prime Minister for his thoughts on Russia, At the Prime Minister's request, Sir R Braithwaite explained that we should guard against being too impatient. was undergoing a tremendous political, economic and cultural revolution. This process could not be completed within one or even five years.
On the economic side, it was encouraging that Gaidar had been brought back into the government. But it remained to be seen how much opportunity he would be given to introduce sensible economic policies. It would take a long time to settle down into a sensible pattern. Nevertheless, there were encouraging signs of
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