The Rt. Hon. Sir John Major KG CH

Tag: Trade

  • Mr Major’s Press Conference in Tokyo – 20 September 1993

    Below is the text of Mr Major’s press conference in Tokyo, held on Monday 20th September 1993.

    QUESTION (Sanke Newspaper):

    It is indeed a great honour for me to ask the first question. My question is as follows. There are discussions to reform the UN Security Council and for Japan to become a permanent member, what is the view of the Prime Minister of the UK, do you think that Japan should become a Permanent Member of the Security Council and if so what conditions should she fulfil?

    PRIME MINISTER:

    We are now engaged I think in what will be a continuing debate about the reform of the Permanent Membership of the Security Council, I think that debate will take a while, there are a number of countries that have obvious credentials, Japan of course, Germany of course, but I think other countries will have ambitions to become Permanent Members of the Security Council and of course to fulfil the obligations that Permanent Members traditionally fulfil. I think that reform debate is now engaged, it will continue for some time.

    The primary concern I think as that debate does proceed is to make sure that whatever the outcome of that debate may be that the Permanent Membership of the United Nations retains the same compatibility that it has at present and is able to act as sufficiently decisively as it can today. It is the effectiveness and efficiency of the Permanent Members that will be primarily in our minds as we look at the question of reform. Clearly the members likely to join the Security Council will need to fulfil the same international criteria that has been the case in the past but I have no doubt that as the debate about the reform proceeds, when it concludes, that Japan is likely to be one of the beneficiaries.

    QUESTION (Japan Economic Journal):

    Ambassador Kistanura [phon] in the newsletter of the Japan Society has written that the Japan/UK relationship has come to a very favourable relationship, unseen in the past, I think in terms of Opportunity Japan, Priority Japan, The Japan Festival, all of these committees have led to such a good relationship. In the eyes of Japan our relationship with the UK is something that we regard highly. In order to further strengthen our relationship what kind of things should Japan do?

    PRIME MINISTER:

    I think as you rightly said the United Kingdom/Japan relationship in trade and economic matters is already very strong. A whole series of initiatives – Priority Japan springs immediately to mind, the large conferences by the UK and Japan and by Japan and the UK – have built up the relationship quite dramatically over the last few years. I think there are two aspects to the relationship: the first is political and the second is economic and trade. If I could say a word about both I would then like to ask Michael Perry to say a word also about the trading relationship.

    Let me touch on the political relationship first. I think that it is self-evident that Asia as a whole is being given a new priority in British policy. It is a time of dynamic political and economic change in Asia and the Pacific and I put that in the general area. But I would say more specifically that Japan is central to Britain’s approach in Asia and our political relationship is closer than it has been for a long time and the relationship between Japan, Britain and other large nations in dealing with international affairs is more effective and more efficient than we have known it in the past and that is going to continue, There is a distinct wish in British foreign policy to give a new priority to our relationship with Japan and our relationship more generally with Asia.

    On trade and economic matters we propose to build on the special relationship that has existed. There has been a very substantial trade flow between the United Kingdom and Japan, the recession of course has affected that, as it has affected every other trade relationship, but it is still growing and British exports, for example, to Japan have grown very dramatically in recent years. That is going to continue. The Prime Minister and I agreed earlier this afternoon that we would have a very high profile conference in London in the early part of January to carry the relationship forward. Richard Needham, the Minister for Trade, and Michael Perry as a businessman with immense experience of Japan and with particular responsibilities, will be looking at how we can carry our trade relations even further and will be making more announcements about that in the New Year.

    So I do not think there is anything new and fresh that I would particularly ask of Japan, what I would ask is that we continue going in the direction that we have been going for a long time. Many of the inhibitions to access to Japan’s markets have gone, some of the cultural inhibitions have not yet gone and there are still some individual areas that I have been discussing with the Prime Minister where we would like some further action. But overwhelmingly we are very pleased with the direction of policy.

    So I think that the relationship will continue to develop and ripen and I would like, with the Chairman’s permission, since I speak upon these matters as a politician, to ask a practising businessman with immense experience of Anglo/Japanese relations, perhaps to add a word on the trading aspects.

    MR PERRY:

    The development of Anglo/Japanese trade relations has been very positive, as the Prime Minister has said, in the last 5 or 10 years. The reason for that of course is in the first place the opening up of the market here and secondly the great cooperation we have had from all involved in the process of identifying markets and bringing the goods and services of Britain to the attention of Japanese buyers. There are of course still a number of areas which we are discussing together, in particular matters of deregulation in the financial and invisible sectors but we know that these are matters which concern Japanese businessmen too and we are encouraged to believe that these matters are being addressed.

    Overall we are concerned as British businessmen that we should be trading together in a multilateral trading system which means that we are judged on the quality of our goods and services, and that is all we ask.

    QUESTION:

    In your talks with the Prime Minister what points did you talk about and which points did you find agreement on in terms of trade and investment related matters?

    PRIME MINISTER:

    We touched on a number of bilateral matters on trade and we shared a view that we must carry the trading relationship forward in the way I described a few moments ago. More widely and. perhaps immediately more crucial for all of us, we spent some time discussing the Uruguay Round and share a determination that that should come to a successful conclusion by 15 December and we spent a very considerable time upon that particular matter. That is an important multilateral agreement that I believe will re-engender a great deal of confidence in the international community, engender an increase in trade and an increase in trans-territorial investment and a creation of jobs and prosperity. So we spent a great deal of time discussing that in particular.

    The converse of course, about which the Prime Minister and I also agreed, was the immense damage that would be done to international confidence and trade were there not to be an agreement in the Uruguay Round.

    QUESTION (Sanke Newspaper):

    Today there will be a joint meeting between the Ministers of Foreign Affairs and Agriculture in Brussels and they will be talking about the agreement on agriculture to which France is opposed, do you think that if the present situation continues the basic agreement could be reached by the end of the year and did you ask anything of Mr. Hosokawa about the opening of Japan’s rice market?

    PRIME MINISTER:

    The meeting that there is in Brussels is a very important meeting, I can express to you the United Kingdom’s view about that very simply and very crisply. The European Community negotiators reached an agreement with the United States at Blair House, we have reached an agreement, we should keep to the agreement, it should not be re-opened and I see no reason for it to be re-opened. That is the view that the United Kingdom takes about Blair House. Agriculture is difficult, self-evidently difficult, but I think it cannot be permitted to prevent the completion of the Uruguay Round on 15 December, it cannot and it must not be permitted to do that so we will have to find a solution to the difficulties of individual members in the intervening period. think there are ways in which that can be done but certainly it cannot be done by re-opening Blair House, that is an agreement that has been done.

    We did not specifically discuss any details from the Japanese point of view of elements of the Uruguay Round but we did discuss the necessity to reach an agreement and Prime Minister Hosokawa made it clear to me that he too favours reaching an agreement.

    QUESTION (Jonathan Annals, Evening Standard Business Day):

    You just expressed your commitment to securing the successful completion of the Uruguay Round, earlier this afternoon Mr Davis from the CBI said that bilateral trade agreements were dangerous and they tended to undermine and perhaps replace multilateral agreements perhaps such as GATT. What is your view of the so-called trade framework talks which began yesterday in Hawaii between Japan and the United States which are intended to increase sales of American products in Japan sector by sector and reduce the trade deficit?

    PRIME MINISTER:

    I share the view that was expressed by Howard Davis of the CBI, what we are looking for is a free trading, multilateral world, that is undoubtedly what is in everyone’s interests, that is what the GATT Round is about and. that must have pre-eminence in our discussions and in our concern. I was not present at any bilateral discussions but if you are going to have a proper free trading system around the world then it has to operate on a multilateral basis and that is and will remain our position.

    QUESTION (John Sergeant, BBC):

    On a domestic matter, could you say whether you are disappointed with the reaction of some of your MPs who appear to have rejected your appeal which you made here in Tokyo yesterday for loyalty to yourself and to the government. One of them said that you were out of touch with the feelings in Britain?

    PRIME MINISTER:

    I am here to look after British interests at home and abroad, to advance the British interests. I do not know which Member of Parliament said that, I do not know in what context he said it, do not know in response to what question he said it, and I think in the absence of knowing any of that I am not going to comment on the remarks of one of over 330 of my Conservative Members of Parliament. I can tell you that the overwhelming view of the Conservative Party is that we have come through the recession, we have now got a satisfactory platform for what we have been seeking for a long time – growth with low inflation. That is a tremendous opportunity for British industry domestically and British industry and the British economy internationally. And it is to develop that that I am here, it is to develop that that the government’s policies are directed and it is to develop that that I believe I will have the overwhelming support not just of the Conservative Party but I think of people right across the country.

    QUESTION (Todo News Service):

    In your talks with the Prime Minister, on specific matters I am sure you talked about individual matters, I am imagining this, could you please tell us what kind of dialogue you had with the Prime Minister concerning individual matters?

    PRIME MINISTER:

    We touched on a very large number of international matters, I think it would probably take between now and midnight to run through all the background and. ramifications of what we covered in our two hour session. But in terms of international matters we discussed China, we discussed Russia, we discussed the United Nations, I touched upon that earlier, we talked about Hong Kong, we discussed a range of matters related to GATT, we touched on bilateral matters, we touched on UN peace-keeping, we touched also on the subject of Prisoners of War, we touched also upon a scheme that we were able to announce today, funded by the British private sector, to take some Japanese post-graduate students from Japan to study at Oxford University in the United Kingdom and we were able to announce that today, we discussed the arrangements for the joint UK/Japan Conference to which we attach great importance, that will take place in January. Later on in the afternoon I discussed with the Foreign Minister a range of Asian matters, Cambodia took a fair amount of our time there. I would not promise you that that is an inclusive list but I think it gives a broad indication of the sort of matters we discussed.

    QUESTION:

    Before you came to Japan we heard that, perhaps emulating President Bush’s visit to Japan, you were bringing a lot of businessmen with you and that you were going into top sales here in Japan, there were such rumours before you came, but in that regard did you have any strong request to make to the Japanese government?

    PRIME MINISTER:

    The British private sector is very able to make its own requests. You are quite right that I brought with me a very high powered delegation of very senior British businessmen and as I said earlier, and I am happy to repeat to this larger gathering, I think probably the most senior delegation of British businessmen ever collectively to leave the United Kingdom and certainly the most high powered delegation ever to accompany a Prime Minister abroad, Michael Perry is the leader.

    We had a series of discussions with the Kadanran [phon] this morning and I have had a series of meetings, of which I think you know. But I suppose the underlying point is this. We are still extremely keen to attract inward investment into the United Kingdom from Japan, I think that has been very successful from the point of the Japanese investor and I can certainly say it has been very welcome and very successful from the point of view of the United Kingdom. I wish to make it absolutely clear that we are happy to see that continue.

    Other than that what we are concerned about, and what Japan is concerned about, is opening up the world trading market so that decisions may be made upon merit in terms of trade, investment and the awarding of contracts, and it was matters relating to that that formed the bulk of our discussions throughout the day.

    QUESTION (Jiji News Service):

    I would like to go back a bit to Japan becoming a member of the Permanent Five, you mentioned that you talked about this with Prime Minister Hosokawa. On your part, if Japan wishes to become a member of the Permanent. Council, what specifically would you request from Japan and in your talks with the Prime Minister did you mention what kind of conditions you would attach for Japan to become a member?

    PRIME MINISTER:

    There would be no specific Japanese conditions that we would expect Japan to follow, what we would expect is that any new members, whomsoever it may be, Japan, others as well if there are other additions, what we would expect is for Permanent Members to be able in principle to play a full role, as have the existing Permanent Members, across a whole range of responsibilities, including peace-keeping, the provision of troops from time to time and finance. So what we would wish is to ensure that the Permanent Members remained effective and to ensure that all the Permanent Members were able and prepared to undertake the same responsibilities that the present Permanent Members could take.

    But we would not be asking for any special or different responsibilities from any new applicant, whether Japan or anyone else.

    QUESTION:

    Given your strictures about the silly and stupid noises off about your leadership that you have been saying here, do you think it was a politically wise judgment for the Chancellor to actually pull a rabbit out of the hat about a leadership campaign going on in London involving himself, the Home Secretary and Mr Portillo? There are suggestions that you feel lonely and isolated as Prime Minister, is the job getting at you and isn’t loneliness and being solitary part of the hazard of the job?

    PRIME MINISTER:

    I have had some pretty extraordinary questions in the last two years, Gordon, three years, some of them actually from you, but I think that one probably takes the biscuit think the second part of it, Heaven alone knows where these nonsenses come from and I cannot speculate on that, it is not for me to suggest where everything that appears and is published comes from, if I did that no doubt I probably would feel very lonely and isolated, but I don’t, so I am not.

    As far as the first part of your question is concerned, I do not think it applies at all and I have simply no idea what led you to ask that part of the question.

    QUESTION:

    Did you discuss with Mr Hosokawa today the Yugoslavian problem and can you tell us is the war in Yugoslavia at its end and who or what is an obstacle to peace at the moment?

    PRIME MINISTER:

    The answer to the first half of the question is we did not this afternoon discuss Bosnia but it is quite probable that we will have the opportunity over dinner when we meet later on tonight to continue our discussions on a range of matters and I would imagine that Bosnia would be amongst them.

    As for the impediment to peace, it is difficult to determine precisely where it is, it seems to be a moving impediment, I do not think one can point the finger at any particular group and say they are the impediment to peace, the fact of the matter is that we want everyone to decide that they are going to reach a peaceful settlement and as this winter approaches it becomes increasingly urgent that that is the case. Last: winter the difficulties of delivering humanitarian aid were serious enough but last winter was fortunately a relatively mild winter in Bosnia, we cannot be certain that this winter will be the same, it may be a good deal more savage and that would mean that the hardship, particularly with the extra period of fighting damaging the infrastructure and communications ever more daily, would potentially be a disastrous occurrence.

    So I think there is a very great premium on every participant deciding that it is necessary to reach an agreement and reach an agreement speedily. The negotiators, David Owen from the United Kingdom amongst them working for the United Nations, are working very hard to achieve such an agreement and I hope that every wise international friend of Bosnia will put whatever pressure they can on the participants to make sure that an agreement is made and crucially kept. I think people are getting pretty cynical, month after month after month, of artificial bogus agreements being signed, promised and broken within hours of their signature. So I think we want to see some concrete action by each of the participants in this dreadful conflict.

    QUESTION:

    I apologise for coming back, Prime Minister, but the Chairman asked me whether I was satisfied with the answer and as I am not I thought I might just come back. Was it wise for the Chancellor to talk about a leadership battle going on in the party against you?

    PRIME MINISTER:

    He did not, as far as I am aware he did not and there is not and I am not aware of one and there is not one and I know it is a great disappointment to many people because it will undoubtedly be very newsworthy but the fact is there is no vacancy and neither is there going to be one.

    QUESTION (NHK):

    There exists a feeling of a great debt from World War II, there were many POWs and there is now an issue of compensation, what is your view regarding this issue? In relation to the reform of the UN Charter, do you think that this enemy clause regarding Japan should be excluded?

    PRIME MINISTER:

    Upon the latter point there was no suggestions about the exclusion of Japan, the question of reform is under discussion and Japan is clearly a prime applicant should there be extension of the Permanent Membership. As far as your earlier question about Prisoners of War, the Prime Minister reiterated his earlier comments and we are having continuing bilateral discussion to see whether we can find a conclusion to this affair, but I do not think it is helpful to comment beyond that.

    QUESTION (Reuters):

    In your discussion with the Prime Minister or with any of the business leaders did the current level of the Yen come up and its possible effects on trade?

    PRIME MINISTER:

    No we did not directly discuss that, there is a very strong Yen at the moment and we discussed exchange rates generally but we did not discuss the particular point which you ask in your question.

    QUESTION (TASS):

    You mentioned that you discussed Russian problems today, could you go into more detail?

    PRIME MINISTER:

    Only up to a point. We were looking at the reform programme in Russia, the difficulties that have been overcome and the opportunities and difficulties that lie ahead, that was the general thrust of our discussion. we both share a wish to see democracy firmly entrench itself in Russia, we understand the difficulties there have been but also the immense progress that has been made over the period of the last five years and we find that progress immensely reassuring. Nobody is in any doubt about the difficulties that lie ahead and we were just casting our mind forward to some of those.

    QUESTION (John Craig, Daily Express):

    You said today that we are on our way out of the hole, if that is right, why is it then that Conservative MPs are still sniping from the sidelines, as your Conservative Party Chairman describes it?

    PRIME MINISTER:

    I described to you what the economic circumstances undoubtedly are. We were in recession for far longer than I would have wished, for a couple of years or so, it was longer and it was a deeper recession than I wished. Self-evidently Britain is now out of recession, the CBI for example think our growth will be rather higher than the Treasury have forecast, but I think there is no doubt that we will have the highest growth in the Community this year and a higher level of growth next year and again the highest level in the Community. So I think when you ally that to the fact that our exports are booming, our productivity has risen, and I think there is no doubt when one puts that against the other economic developments that we are seeing domestically, that the British economy is recovering in precisely the way we would wish it to recover if we are to have a sustained period of growth with low inflation. It has not been easy to achieve that, it has been very painful not least for many companies and many people in the United Kingdom, but it has been achieved, what we now have to do is to use that platform to make sure we can sustain it over a very long period and that is the matter that concerns me.

    As far as sniping concerned, politics is sometimes about sniping, but it does not alter the realities and the realities are that the thing that is of greatest importance is the growth of the British economy, the return to increasing prosperity and the opportunity to put more British citizens back to work, that is what. I am concentrating on, that is what the government is concentrating on and I fervently hope that is what every Member of Parliament will concentrate on.

    QUESTION (NHK):

    Four years from now Hong Kong will be returned to China, this is a relevant question, the UK had a colony over the past 150 years, how do you view this UK colonial rule in Asia for this past 150 years? In 1902 there was an Anglo/Japanese alliance but during World War II we had a different relationship, how do you view Japan’s dominance in Asia during World War II?

    PRIME MINISTER:

    I think there are some things, I am predominantly concerned with looking at the present day position and what the opportunities are for the future. But as far as past colonial rule is concerned, a great deal of that was a long time ago, I think it offered a great deal to a large part of the world. At the moment we are moving towards the end of British responsibility for Hong Kong, that will end formally in 1997, that does not mean we will not continue to have a very strong and powerful affection for Hong Kong, we most certainly will, it does not mean we will not have a continuing interest in Hong Kong, we certainly will, it does not mean we will not continue to have a great deal of trade relationships with Hong Kong and investment in Hong Kong, we most certainly will do all of those things, and what we are concerned to do is to make sure that Hong Kong is able to continue as a free and open entrepôt in the future, just as it has done in the past, and I think in our negotiations with China we will be able to achieve that outcome.

    QUESTION:

    Concerning the privacy law in terms of press coverage in your country we have heard a lot about the possibility and need for protection of privacy being discussed in your country, about self-regulating bodies being established, what does the government think about this, are you thinking about some legal approach to this matter or are you going to leave it in the hands of the self-regulatory bodies? In this regard it seems like the White Paper is delayed in being produced, could you explain the situation?

    PRIME MINISTER:

    I think you have heard the evidence of your own ears that our friends, the British press, are not repressed, they look like a pretty free and open press to me and I have absolutely no doubt that they will be as irrepressible in the future as they have been in the past. We do have a report that was commissioned on the subject of that matter and we are examining that report and will make our announcement soon, but I think we had better finish our examination and I do not think it would be prudent to make any announcement of that sort in Tokyo, I think that is an announcement that will be best made when conclusions are reached in London.

    CHAIRMAN:

    We would like to end this Q and A session, can we have any message to the Japanese people regarding your visit here to Japan, can we have the last remarks from you, Prime Minister?

    PRIME MINISTER:

    I would simply wish to say this in conclusion. The relationship between Japan and the United Kingdom has grown and widened and deepened very significantly over the last decade or so, one notices that most obviously in the trading and economic relations, I think one increasingly sees it in international cooperation as Asia becomes self-evidently more authoritative in the world at large, So I regard our relationship with Japan as extremely important and I am delighted to have had the opportunity of returning to Japan for the second time in just a few weeks.

    There are as you may know, or perhaps you may not know, there are many tens of thousands of Japanese students in the United. Kingdom and there are quite a few British students in Japan and I think that shows the extent to which as the generations move on the relationship between our two countries becomes ever closer and think that is a very welcome development and I welcome the opportunity to express it.

    CHAIRMAN:

    Thank you very much, Mr Prime Minister. In a very tight schedule you joined us and we appreciated very much your joining us at this National Press Club. From the Japan National Press Club, as is customary, I would like to present you with a small memento of this occasion. This is a pen done with Japanese craftwork.

    PRIME MINISTER:

    Thank you very much, I think this is the way to conduct a press conference and I think you have probably set a precedent that I am sure my colleagues from the United Kingdom will wish to follow on every future occasion.

  • Mr Major’s Briefing en route to Tokyo – 18 September 1993

    Below is the text of Mr Major’s on the record briefing on the plane to Tokyo on Saturday 18th September 1993.

    MICHAEL PERRY (UNILEVER):

    We have a good team of businessmen in this group as you have seen and that in itself is unaccidental; what it describes most fundamentally is the value we place on a visit of this nature in the company of the Prime Minister at this sort of time. This is a time of enormous change in Japan, as you will be aware, a new government, new thinking, massive economic problems, new kinds of problems for them, a determination to drive through improvements and changes in their own balance of trade and payment patterns, recognition of the serious problems they have got in dealing with their trading partners and Britain over the last five or six years has been seeking to achieve progress in this area through rather different means from our American friends; we sought to persuade them about our role as their best friends in Europe in terms of inward investment and looking to build partnerships within Japan.

    What has happened is that most of the formal barriers of trade have now disappeared; there are one or two issues still around but they are really quite minor; they are matters such as whisky, leather, shoes. What is much more important is the Japanese propensity to buy foreign. This is cultural, it is historical, they are not used to the idea of putting their business in the hands of foreign companies. This is much more down to us to solve than down to governments to solve. Governments can pave the way but we have got to do it. There is a massive problem of convincing Japanese buyers that they can rely on the quality, supply and all the other issues that they think are important in a foreign company so that is a new area of focus and it is very much what the export promotion programme for the DTI by the British Overseas Trade Board has been about. This visit ought to give new impetus to that coming as it does right behind the new Hosokawa package which focuses very much on getting the Japanese consumer to have some of the benefits of the high yen. They are not doing it at the moment; margins are still high, the cost of imported products is absurdly high and there are still plenty of restrictive practices around in the retail and wholesale trade and it is nice, I think, to see the growth of some of the discounters who are now emerging in Japan who are sticking a knife into the soft underbelly of a rather fat distribution system and they are getting a lot of encouragement which is important.

    PRIME MINISTER:

    Let me just add a word or two from my perspective:

    This is overwhelmingly though not exclusively a trade-related trip. The trade relationship we have with Japan has grown very dramatically; all of you will be familiar with the inward investment we have seen in the North-East, in Wales and elsewhere but I think the time has come when we need to give that trading relationship a fresh emphasis and a fresh push and there are a variety of reasons why now is a good time to do that: the new Hosokawa Government is one, I will be the first overseas visitor, I think, that he has received; the fact that the Japanese are becoming increasingly concerned about the scale of their trade surplus, as others are, renders it another ideal opportunity for us to push the case for British exports and for British investment.

    There are a number of particular matters that clearly one will raise when we are there. I shall raise the GATT Round and the importance of making sure we get a satisfactory settlement there; there are still some Japanese problems on GATT that need to be solved. There are a series of other matters that you would he extremely surprised if I didn’t raise; I need not run through a long list of them but whisky springs immediately to mind. On the last visit I had to Tokyo eight or nine weeks ago, the external tariffs on whisky disappeared but there still is a very discriminatory internal tariff on whisky – you can argue whether it is three times as high or ten times as high but there is no doubt that on whisky in particular and spirits there is a very high discriminatory internal tariff and that is the sort of matter I will be discussing with them.

    We certainly want to see what we can do to close the very substantial trade gap; it is something like £5 billion. I think there is ample scope for us to see that close.

    We have on this trip as high-powered a delegation of senior British businessmen as I think can ever have left the United Kingdom together; they will not be novitiates in Japan; many of them will have had a relationship for a long time and they will be there to develop longer-term themes. Whereas in India we were looking at the prospects of a series of contracts that we might or might not have got in the very short-term – as it happened on the Indian trip we did get them – here we are looking at a longer-term perspective rather than short-term contracts so on the business front that is the sort of thing we will be discussing.

    There will be a meeting with the Kaidonran [phonetic] for the businessmen and I, and I hope that will be a successful meeting. I have a fairly lengthy meeting with the Prime Minister and all the businessmen will join me afterwards and we hope this will play some part in opening a few doors and speeding up some decisions.

    On other matters, there are some bilateral matters and there will be some political matters we wish to discuss. We will certainly discuss the question of the prisoners of war issue but I don’t propose to go into details of that at this moment but there are a range of bilateral issues like that.

     

    QUESTIONS AND ANSWERS

    QUESTION (Gordon Grieg, Daily Mail):

    Do you think that the controversy in the Conservative Party about your leadership tends to undermine the importance of a trip like this?

    PRIME MINISTER:

    No, I don’t and I very much doubt that Mr. Hosokawa and I will give it a passing thought.

    QUESTION (Gordon Grieg, Daily Mail):

    But the Japanese press might!

    PRIME MINISTER:

    I can’t answer for the press.

    QUESTION (Gordon Grieg, Daily Mail):

    So you don’t think it is a diversion at all?

    PRIME MINISTER:

    I am here to discuss trade and that is what I will be doing.

    QUESTION:

    Are you a little worried that this is perhaps a slightly inconvenient time for you to be abroad for so long? Some of your colleagues at Westminster are a little worried that you are going to be out of the country for a week and things are looking a bit dodgy.

    PRIME MINISTER:

    I am glad you confirm they need me so much!

    QUESTION (Mark Webster, ITN):

    Do you personally favour the idea of some form of compensation for the POWs? Although I appreciate you can’t discuss it publicly, do you personally feel that some form of compensation would be appropriate?

    PRIME MINISTER:

    I am going to discuss the matter in a way I think is most appropriate and that is to express views directly to the Prime Minister.

    QUESTION:

    Mr. Perry, British trade delegations have been coming to Japan for about the last thirty years and it has made no appreciable impact on the balance of trade. They seem to have a great tradition of buying Japanese. What makes you think you are going to change anything?

    1. PERRY:

    Of course that is right but there has been a great deal of movement. When I started doing this sort of thing about ten years ago we were talking all the time about trade disputes, about massive problems of access, built-on tariff barriers, non-tariff barriers, quotas, every kind of impediment. They have in the course of a decade been quite literally swept away.

    What has happened is that our exports to Japan have gone up in a three-to–four-year period by 18%, the first half of this year up another 13%. I think we have got to build on positions of that kind.

    The point you are making is a very fair one. We will not succeed by browbeating either Japanese officials or Japanese customers. If you are a customer, you are not going to succumb to being browbeaten by a supplier; you are going to be persuaded by a supplier eventually on a set of criteria that you will set, nobody else.

    QUESTION:

    But isn’t that the Japanese method, browbeating?

    1. PERRY:

    I don’t think so. I have been doing trade there for a long time. I have encountered no real barriers to selling superior products.

    PRIME MINISTER:

    Can I just add one word to that last point? I forget which of the businessmen said it to me last night but I think it is germane and I suspect Michael will strongly agree with it. It is quite difficult to get into the Japanese market in the first place; it takes a long time; you don’t just make one visit and they sign up huge contracts but as he put it to me, the more you get into the Japanese market the easier it is to do further business and there is a very dramatic growth in the business. It is very much a long-run game and I think this is part of accelerating that. I hope it will help to show how strongly the Government is behind the British export effort and the British investment effort hut it isn’t something that one expects suddenly to happen overnight and dramatically but the growth in exports over the last few years has been pretty astonishing. Michael quoted a three-year figure; I think it is just over 14% in the last fifteen months or so it is on an escalating trend and I hope we can give it another push because they are keen to import, I am keen to encourage them to provide import incentives and to remove any cultural discrimination that there may be – in the case of things like whisky, taxation discrimination.

    QUESTION:

    On GATT, although there are problems with the Japanese, is there anything of a magnitude that could derail the whole Uruguay Round as compared with the problems between America and the EC which clearly could?

    PRIME MINISTER:

    I think it is most unlikely. There are a series of problems with Japan, rice is the most obvious one but there are others as well but I would be astounded if it were a Japanese problem that brought the GATT Round to an unsuccessful conclusion, absolutely astounded. I think at the moment the Japanese are waiting to see what happens in the disputes over Blair House and on agriculture and on one or two other high-tariff problems between the United States and Europe but once that is out of the way, although there are some quite painful decisions – rice is the most painful – I don’t have any doubt at all that the Japanese would reach a conclusion and that they would not block a GATT Round.

    QUESTION:

    I just wanted to go back to the question of your leadership, Prime Minister. You were quoted recently as saying that you would leave your job when we least expected it and some of your critics inside the party have been suggesting that that could be quite soon. Can you give us a pledge that you will not be leaving quite soon, that you will be staying on until the next election?

    PRIME MINISTER:

    I think you misread what was said but I think you can expect to be having conversations like this with me for quite a long time ahead. I look forward to them very much.

  • Mr Major’s Statement on the Economic Declaration – 17 July 1991

    Below is the text of Mr Major’s statement on the Economic Declaration, made on 17th July 1991.

    PRIME MINISTER:

    It is customary at the conclusion of the Summit for the Chairman to draw out the main themes of the Declaration. Happy to confirm this tradition.

    When we met in Houston a year ago, we welcomed the democratic revolutions around the world and committed ourselves to strengthening and securing democracy.

    In the year since Houston, the world order has been challenged, and has risen to the challenge.

    Iraq’s invasion of Kuwait brought home to all of us the threat that one lawless country can pose to the law-abiding world. We are still living with the political and economic consequences and this Summit has been a productive opportunity to draw some lessons and to deal with some of the wider political and economic issues where our countries, the wealthiest in the world, must give a lead.

    Political

    A number of these challenges were addressed in the Political Declarations we issued yesterday.

    We are determined to strengthen the United Nations system, politically and economically. With the Security Council now working as it should, the UN should be able to prevent fires as well as put them out. It needs the means at its disposal to tackle humanitarian emergencies. The UN must also be one of the means through which we curb the spread of weapons of mass destruction and through which we register and control conventional arms transfers.

    The theme of the Summit has been building world partnership and strengthening the international order. We were very conscious of the global nature of many of the problems we were discussing and of our responsibility to agree policies that did not just suit us but show our commitment to other countries as well.

    Our first responsibility, reflected in the Economic Declaration which will be issued very shortly, has been to underpin democracy, human rights, the rule of law and Sound economic management. I shall summarise the main themes.

    Our shared economic objectives are sustained recovery and price stability. We are determined to maintain the medium term strategy endorsed by earlier Summits. We welcome the fact that there are now increasing signs of economic recovery.

    We have committed ourselves to continue the strategy which has contained inflationary expectations and created the conditions for sustainable growth and new jobs.

    Crucial to the future prospects of the world economy is the success of the Uruguay Round. However technical the individual issues, the underlying reality is that failure in the GATT Round would lead to protectionism, a decline in trade and a reduction in job opportunities. The political ramifications would be equally devastating.

    We discussed this in some depth yesterday and have today committed ourselves to progress in the key remaining areas (market access, agriculture, services and intellectual property).

    Each of us has made a personal commitment to work for the success of the negotiations before the end of this year. We will be ready to intervene if differences can only be resolved at the highest level.

    Without success in the Uruguay Round, much of our help to the countries of Central and Eastern Europe would be undermined.

    We have offered strong support for political and economic reform in those countries. In different ways all the Group of Seven members are contributing know-how to enable the countries of central and Eastern Europe to move to market economies. There is no point in having a market economy without a market and that must include access to the markets of the developed countries. We have committed ourselves to that and welcome the progress which has been made.

    In the context of Eastern Europe – and more widely – we have discussed environmental challenges and energy. We will all take a full part in the establishment of a European Energy Charter.

    We have agreed to work to secure stable energy supplies worldwide, to remove barriers to trade and investment in energy, to encourage high environmental and safety standards and to cooperate on research and development.

    Concern for the environment touches on almost every aspect of policy. This was a good moment to take stock, a year before the UN Conference on Environment and Development. We commit ourselves to giving the Conference the necessary political impetus. By the time it opens we aim to achieve:

    (i) an effective framework convention on climate change committing all participants to concrete strategies to limit net emissions of greenhouse gases;

    (ii) agreement on principles for the management, conservation and sustainable development of all types of forest leading to a framework convention.

    We support the negotiation of a framework convention on biological diversity, including the protection of ecosystems, if possible to be concluded next year.

    We welcome the progress made in the development of a pilot programme for the conservation of the Brazilian tropical forest since the Houston Summit, and will financially support the implementation of the preliminary stage of the programme.

    Strengthening the international order implies support for the policies of good government. All the evidence suggests that bad government is a significant factor in the poverty of developing countries.

    In the Declaration on arms transfers we noted the recent decisions by several countries to take account of disproportionate expenditure when setting aid programmes. In the Economic Declaration we have commended those countries who have adopted the principles of respect for human rights and for the law; democracy, pluralism and accountability and sound market-based economic policies.

    We have agreed on the need for additional debt relief measures for the poorest, most indebted countries which go well beyond those already granted under Toronto terms. If I may say so, that will build on the initiative I took at the Trinidad meeting of Commonwealth Finance Ministers.

    We have, of course, given an undertaking to go on providing humanitarian assistance to parts of Africa facing severe famine. That too links in with our wish to strengthen the ability of the UN to respond swiftly and effectively to natural disasters.

    The problems of drug abuse affect all countries, both rich and poor. Action was set in train by previous Summits. This time we have focused on stepping up the fight against money laundering and against the supply of chemicals which can be used to make illicit drugs. We want to strengthen the capacity of law enforcement agencies to target the illicit drug movements. We have asked the Customs Cooperation Council to report on this.

    You will find in the Declaration support for the moves being made towards the political and economic transformation of the Soviet Union. That will be the story of this afternoon and I shall not say more now.

    Finally, we were all delighted to accept a generous invitation from Chancellor Kohl to go to Munich in a year’s time for our next Summit. We look forward to that.

    Thank you very much.

  • Mr Major’s Speech to the American Chamber of Commerce – 27 April 1989

    The text of Mr Major’s speech to the American Chamber of Commerce on 27th April 1989.

    CHIEF SECRETARY TO THE TREASURY:

    I am grateful for this opportunity to address the American Chamber of Commerce. I believe it is true to say that the bilateral links between our two countries have never been stronger, either at a political or a commercial level. At present the US is the largest recipient of UK direct overseas investment and US is the largest direct investor in the UK. These investment flows are very welcome, and are the most tangible sign possible of mutual confidence in our respective economies. We see a similar pattern in visible trade. UK exports to the US, and US exports to the UK, were both around 18 billion dollars in 1988.

    Our two countries also share similar convictions about the importance of enterprise, choice, initiative and the need to minimise government controls over industry and commerce and, for that matter, the individual, too. We also agree that the Government has an important role to play in providing a stable background in which industry can operate effectively. The main job is to reduce the current level of inflation and seek to eliminate it in the future. Inflation is the first and most serious problem we face. It undermines business and personal planning. It destabilises industrial relations and it can destroy within a few years the savings of a lifetime. That is why the elimination of inflation must remain the central economic objective. This is why monetary policy has to remain tight to maintain downward pressure on it. And it will remain tight, so inflation should turn down later this year. I know that people dislike the short term discomfort of high interest rates. I understand that. But they are absolutely necessary if we are to avoid the long term pain of an inflationary spiral that would damage our economic competitiveness, our industrial and commercial growth and our individual prospects. We have made it absolutely clear that we are not prepared to take risks with inflation.

    Much has changed these last ten years. During the 1980s the UK has grown faster than all other major EC countries, and – if it is not ungracious to say so before this audience – even more rapidly than the US. In the previous two decades the UK was at the bottom of the growth league. Now it is at the top. The same story holds for investment. In the 1980s the growth of total investment here was higher than in any major European country, after being pathetically low in the 60s and 70s. Last year alone the growth of business investment was over 14 per cent and we expect a further 8 per cent this year. Over the past 7 years total investment has grown over twice as fast as total consumption. By contrast, during the 70s, consumption grew over 5 times faster than investment.

    This investment is critical and has enabled our industry to improve its productivity considerably. Indeed, the growth of productivity in the UK during the last decade is second only to Japan of all the major industrial countries and manufacturing productivity has grown more rapidly even than in Japan. Recently debate has focused on the trade deficit. For last year the published figures show a current account deficit of 14.5 billion pounds or 3.2 per cent of GDP, although it must be said that these figures certainly overstate its size. The balancing item – which consists of an unknown mixture of unidentified capital inflows and unrecorded net exports – was even larger, at 15 billion pounds, than the total recorded deficit. Nevertheless it is clear that the current account deteriorated significantly between 1987 and 1988. I want to consider three aspects of this: what caused the deficit, whether it poses a threat and how it will be corrected.

    Firstly, what caused the deficit?

    The main reason for the balance of payments deficit is the dramatic surge in investment I referred to a moment ago. That has not been accompanied by a comparable increase in savings, so UK has had to import capital from abroad. The net capital inflow is the necessary counterpart of the current account deficit. With the world economy becoming increasingly integrated, it is inevitable that there will be differences in patterns of saving and investment in different countries, and hence balance of payments surpluses and deficits.

    It is clear that consumer spending in the UK has also been growing rapidly, although, as I have said, at only half the rate of investment. The successful supply side policies of recent years, together with this extra investment, have enabled our economy to increase output substantially. But last year domestic demand from both companies and persons grew even faster than industry’s capacity to meet it. The excess was diverted partly into imports and partly into inflation. This unwelcome resurgence in inflation is a worldwide phenomenon. In response, there has been prompt action to tighten monetary policy around the world, reflecting a common determination to get inflation under control, and keep it under control.

    Does the deficit pose a thread?

    The forecast we made at the time of the Budget indicated a balance of payments deficit of 14.5 billion pounds, around 3 per cent of GDP.

    Given the underlying strength of the economy this is readily financeable. There are three key points which keep the UK deficit in its proper perspective.

    First, the UK’s net overseas asset position is extremely strong. Indeed the ratio of our net overseas assets to GNP is by far the largest of any major economy.

    Second, the nature of the present deficit is quite different from those the UK faced in the 1970s. In those days, the UK government was borrowing overseas to fund an excessive spending programme. By contrast we are now running a substantial budget surplus of around 3 per cent of GNP. In the three years to March 1990 we will have repaid around one sixth of the outstanding government debt. As a result the public sector is adding to total savings, and not contributing to the deficit in any way.

    Thirdly, the most important point to bear in mind when putting the balance of payments deficit in context is its composition. Only about one quarter of the growth in the value of manufactured imports between 1987 and 1988 was accounted for by consumer goods (including cars).

    The remainder, fully three quarters, was up of goods for production and investment. The significance of this is that it represents British firms investing both to modernise and increase output. The fact is that we are in the midst of an investment boom that any previous government would have given their eye-teeth for. The short term impact on the balance of payments should be the precursor of long term improvement in productive capacity and efficiency. There is more to the trade gap than video recorders.

    In the first quarter of this year the current account deficit was around a fifth lower than the peak registered in the fourth quarter of 1988. The latest figures provide further evidence of the trends I mentioned a moment ago. Goods for production and investment continue to represent the major part of our imports. Indeed imports of consumer goods fell by 1 per cent between the fourth quarter of 1988 and the first quarter of 1989.

    I am also glad to see exports performing well as capacity constraints are eased by the rise in investment and the slowdown in domestic demand. Manufactured exports reached their highest ever level in the first quarter of this year, whether measured in value or volume terms. They have increased 13.5 per cent in volume terms since the first quarter of last year. Our exports of consumer goods are doing particularly well.

    How will it correct itself?

    This illustrates what we have always made clear: that the balance of payments deficit is the result of private sector decisions, and that therefore it is through changes in private sector behaviour that the gap will be closed.

    It is now clear that the current level of interest rates is beginning to have the effect we intended. Higher interest rates make saving more attractive and borrowing less so. They will also reduce the growth of consumption to a more manageable level, and in so doing reduce the growth of imports of consumer goods. And the evidence of improvement is gradually accumulating: the housing market has slowed down considerably both in terms of prices and turnover. The decline in turnover is important because many consumer spending decisions (eg buying carpets, curtains, refrigerators) are associated with moving house. Recent statistics on retails sales and M0 can confirm that consumer spending growth is slowing down in response to the tightening of monetary policy against the background of a budget surplus. That is welcome but we must recognise that the process of reducing the deficit will take time. It will not happen overnight.

    Of course, the current investment boom, which is adding to the deficit in the short term will, over time, play its part in reducing the deficit. These investments will lead to increased capacity, greater competitiveness and a better export performance, as well as displacing some imports. Either way the new output will help to reduce the balance of payments deficit.

    I have no doubt that improved competitiveness is the key to a more prosperous and stable economy. To achieve that, companies must not only invest, not only improve the quality of their goods but also increase their competitiveness by constraining their unit wage costs. Achieving this is an important function of good management and prudent investment. And I must tell managers bluntly that the Government will not permit the depreciation of sterling as a way of artificially improving competitiveness. Such a policy is not sensible. It is not prudent. And it rarely works. it would simply raise import prices and add to inflationary pressures.

    It is instructive to look back at experience in the 1970s. In 1974 the UK had a balance of payments deficit of 3.8 per cent of GDP, somewhat higher than last year’s outturn. Over the period 1973-1978 the effective exchange declined by a quarter yet the UK’s competitiveness – measured in terms of relative unit labour costs – did not improve but actually further deteriorated by 5 per cent. I can also assure you that the Government will not attempt to reduce the deficit by protectionist measures such as import controls. We are a very open economy and can only be hurt by a slide into protectionism.

    The Government’s role in improving competitiveness is to strengthen economic performance through supply side measures, namely deregulation, privatisation and tax reform. Over the last decade nearly 40 per cent of the state owned commercial sector has been transferred to the private sector since 1979 and a further 20 per cent is in train. The abolition of exchange controls and various other deregulatory measures have all helped to make markets more efficient. The latest White Paper shows the government’s continued commitment to creating an environment in which enterprise can flourish. It lists no less than 120 deregulatory measures achieved in the previous 18 months and specified 80 measures scheduled for the future. And we now have a tax structure which rewards enterprise and initiative, with one of the lowest corporate tax rates in the world.

    Business is responding to this invigorating climate. New businesses are being created at an unprecedented rate. New firms are registering for VAT at an average rate of 1,300 a week. These new enterprises will compete for business in home and export markets and will play a part in lowering the deficit.

    The Government is playing its part in helping the market to operate more efficiently by improving the flow of information from retailers to manufacturers. From the beginning of June more inflation will be available from Customs and Excise marketing agents about the sort of goods being imported by different companies. This will enable British firms to contact the importing companies to see whether they could compete with those imports. I am sure they can and I hope they will.

    Conclusion

    To summarise: the trade deficit resulted from excessive growth in domestic demand last year. To combat this, monetary policy has been tightened considerably in the last year (both in the UK and the US). UK fiscal policy is extremely prudent. Higher interest rates will encourage additional savings, discourage borrowing and slow down spending. The private sector will respond to these policies although it would be foolish to expect the deficit to narrow immediately. By their nature these adjustments take time. But they will take place.
    What is clear is that the current economic position bears no relation to the balance of payments crises in the 1960s and 1970s. The prophets of doom and gloom should lift their eyes from the history books and look instead at the remarkable transformation that has taken place in the Government’s own finances and on the ground in Britain’s industries.

    The productivity and profits of UK companies are at record levels. The number of people in work is at its highest ever level. And we are seeing the longest sustained fall in unemployment since the War. Our current prosperity is based on extremely strong foundations, business is investing to make sure it continues and I have no doubt that it will do so.