Downing Street Years - Margaret Thatcher [309]
Both President Reagan and I were keen that the summit should be a success for the Japanese. The President was a strong supporter of Prime Minister Nakasone and was rather more inclined to be optimistic about the changes which had been promised in Japan’s economic practices than I was. But I had to agree with him that Mr Nakasone had the right instincts in international affairs and it was important not to endanger his position.
In fact, there was not much practically to show for the vigorous efforts we had made to have the Japanese open up their markets. There was, for example, still heavy discriminatory tax on imported liquor. Whisky was the fourth largest single UK export to Japan. This being my own favourite nightcap, I felt a truly proselytizing zeal to encourage the taste for it. The former Governor of the Bank of Japan, Mr Maekawa, had also produced a report on ways to reform the Japanese financial and commercial system so as to allow the reduction of Japan’s huge trade surplus. But it was better on generalities than specifics.
Japan’s trade surplus was sharply up again in 1986. But the Japanese had allowed the yen to rise in value, something which was far from popular among Japanese industrialists, and this would probably be the most important factor towards achieving a better balance of international trade relations in the future. The other good news from our point of view was that by now forty Japanese manufacturing companies were operating in the UK, creating over 10,000 jobs; and the Nissan plant was expected to start full-scale production that summer with total employment of around 3,000 people. On the cultural level, contacts between our two countries were good. The Japanese had begun a policy of endowing teaching posts at British universities. The eldest son of the Crown Prince of Japan had recently completed two years at Oxford University. Our own Prince and Princess of Wales were due, in turn, to visit Japan.
I talked to Mr Nakasone shortly after the end of the summit. After congratulating him on the organization — which was far better than the previous Tokyo summit I had attended — and discussing the inevitable subject of Scotch whisky, I said that I wanted to try to ensure that in future relations between Britain and Japan were not dominated by the trade imbalance. That was still not possible at the moment. Some sizeable purchases by the Japanese of aircraft would help. But I was clear in my own mind that we must get beyond these issues to those of wider international importance if Japan was to play her proper role in world affairs.
Japanese politics are sui generis. Leaders ‘emerge’ from negotiations between factions. Decisions are taken through gradually developed consensus rather than debate. And in spite of his achievements in establishing Japan as a major player on the international stage, Mr Nakasone was unable to buck the convention by which the nominees of other factions in the governing Japanese Liberal Democratic Party (LDP) must have their turn in office.
It was his successor, Mr Takeshita, as head of the largest faction in the LDP, who took the most important decisions to make structural changes in the Japanese economy. Of most importance from our point of view, it was he who removed the discrimination against Scotch whisky and opened up the Japanese Stock Exchange to two of the best-known British stockbrokers who had been excluded. I said to Mr Takeshita when he came to London to see me that he was the fourth Prime Minister with whom I had raised the issue of the Stock Exchange. He promised action but asked for time. And he proved as good as his word. I did not have to raise it with a fifth. Partly as a result, however, of public resentment at the introduction of a new, though modest consumption tax and partly as a result of political scandal, Mr Takeshita resigned in May 1989. His successor, Mr Uno, after just a few months in office, soon resigned too. So it was the comparatively young