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1986 May 5 Mo
Margaret Thatcher

Press Conference after Tokyo G7

Document type: speeches
Document kind: Press Conference
Venue: Hotel New Otani, Tokyo
Source: Thatcher Archive: COI transcript
Journalist: -
Editorial comments: The Press Conference probably took place before the reading of the communique at 1600. Sir Geoffrey Howe and Nigel Lawson was also present.
Importance ranking: Major
Word count: 5500
Themes: Agriculture, Autobiographical comments, Defence (arms control), Economy (general discussions), Monetary policy, Energy, Trade, European Union (general), Foreign policy (general discussions), Foreign policy (Asia), Foreign policy (Australia & NZ), Foreign policy (International organizations), Foreign policy (Middle East), Foreign policy (USA), Foreign policy (USSR & successor states), Foreign policy (Western Europe - non-EU), Law & order, Leadership, Terrorism

Prime Minister

Ladies and Gentlemen:

This has been a most successful Economic Summit, the eighth which I have attended, very successful from Britain's point of view.

We came to Tokyo knowing what we wanted to get out of the Summit and between us—Geoffrey Howe, Nigel Lawson and myself—feel we have achieved our objectives; in short, mission accomplished.

You will ask what did we set out to achieve? I think four things: first, a firm statement on Chernobyl, and we got one, which records our confidence in a properly managed nuclear power industry. It emphasises the responsibilities to the world of individual countries which the Soviet Union did not discharge and it seeks to build on the existing international arrangements the commitment of all countries to report and exchange information so that we can make nuclear power a demonstrably safer form of energy.

Second, a firm statement on terrorism and, in particular, state-sponsored terrorism. By dint of a lot of hard work, we got that too. We have not merely reinforced [end p5] our pledge to fight terrorism relentlessly, especially Libyan state terrorism, but we have also reinforced the Summit stance in the following respects:

first, refusing to sell arms to terrorist states; second, action against diplomatic missions of terrorist states, including their possible closure; third, denying entry to those expelled from another country on suspicion of involvement with terrorism;

fourth, stricter immigration and visa requirements; fifth, improved extradition procedures; and sixth, action against all forms of terrorism associated with airlines and ships.

Now, the third thing that we came to achieve was to secure reaffirmation of the thrust of economic policies pursued by the Summit countries, which have increasingly over the past seven years followed our prudent financial policies in Britain. Again, we succeeded. Increasingly, these policies are paying dividends in lowering inflation and in steady growth. We have agreed that those policies need to be followed if we are to reduce unemployment, which affects particularly ourselves and our European colleagues. The fall in oil prices holds out a better prospect, provided we stick to present policies and do more to tackle such issues as the huge and rising Japanese trade balance, the United States budget deficit, and protectionism. [end p6]

And fourth, we came to Tokyo determined to open up a real debate on protectionism preparatory to the GATT meeting. We achieved that too. As you know, there is far too much protectionism in all our countries. We must stop its spread and roll it back. This is in the best interests of Britain and British jobs, since proportionally we are the biggest exporters of all of the seven countries represented here.

In all this, we advanced the interest of the farmers in handling sensitively the problem caused by the huge overproduction of food, resulting in large surpluses. In doing this, we recognise the crucial need to preserve our rural communities, which are the backbone of so many of our societies.

We look forward to an early start in September to a comprehensive new round of GATT negotiations, taking in manufactured goods, services, patents and intellectual property, and agriculture. We look forward to those negotiations resulting in lower trade barriers around the world. The Summit is very much behind this necessary move.

We have, of course, discussed many other issues, East-West relations and arms control talks, the Middle East and the need to step the war against drug trafficking, which I last raised at last year's Summit in Bonn. [end p7]

So to sum up: a valuable, constructive, forward-looking Summit. I feel that we have all spent our time in Tokyo very usefully indeed.

Ladies and Gentlemen, your questions. [end p8]

Question

Prime Minister, the monetary question which is mentioned in the communique at some length; how much time was spent on that in discussions by the Heads of State and Government, in terms of the monetary reform? And I wonder, in terms of the remedial measures that the Groups of Seven and Five will consider, as one reflects on it now, would there be certain things that would require immediate attention if that process were working today?

Prime Minister

Heads of Government had our customary debate on economic matters, of which monetary measures was one of the matters which we discussed. We also had in the Plenary Meeting, a very full discussion of them, when we were accompanied obviously by our Foreign Secretaries and Chancellors of the Exchequer.

I do not believe that today there are immediate matters which need attention, but I will just ask Nigel Lawsonthe Chancellor of the Exchequer if he agrees with that.

Mr. Lawson

This is also something, of course, which was discussed at considerable length in the meetings we had among the Finance Ministers of the Seven.

The matters which do need immediate attention are, I think, those matters which are well known and which have been identified by the Prime Minister in her opening statement, namely [end p9] the American budget deficit and the associated trade deficit in the United States. On the other hand, the massive and growing trade surplus of Japan. These are certainly matters which have been discussed and which will be discussed more intensively in the framework which was agreed here.

Question

Prime Minister, following the statement on international terrorism, is there anything new and specific which you expect the Summit countries, including Britain, to do now?

Prime Minister

As you know, we are doing those things which we indicated in the statement. There has been an extension of the Bonn Declaration on Hijacking to maritime matters and other forms of terrorism in aviation. That, to some extent, is new. There is also a piece at the end of that statement—I do not happen to have the statement with me, but if you look towards the end you will find that there is a group who are going to keep in close touch and possibly to recommend further measures. We were not able to add further measures to this list as some of them, of course, would require advice from countries' advisors as to which they can best put into operation.

Question

Prime Minister, some senior officials in the Reagan [end p10] Administration appear to be taking home from this Summit the perception that they have now been given carte blanche to act against terrorism. I wonder if you agree with that perception or perhaps have a comment on it.

The second part to this question is the question of extradition. Does the US-UK extradition agreement, that I understand is in the Senate, have to be approved before this declaration can take effect?

Prime Minister

First, I would not agree with your interpretation of what I think United States has said. It may be that what they conveyed and what reached you are not the same things, but I am quite certain that the United States would not be saying it had carte blanche to act against terrorism. The United States is very pleased with the communique we have on terrorism, because it is specific and because a number of other things were mentioned and those are being considered. So the United States is pleased with that and very pleased that Europe is taking action along these lines. That does not amount to carte blanche and I do not believe they believe it does.

Now secondly, it has improved extradition procedures to ensure that terrorists are brought to trial. We, for example, are actually changing our extradition law because we find that it is not in keeping with the times. It means that anyone who comes up for extradition procedures has of course [end p11] to go before the legal process of the country from which extradition is required and that will continue.

As we are changing and improving our own extradition procedures, I very much hope that the United States will also pass the new extradition proposals. It is very very important to Britain obviously. It is very important to fighting terrorism the world over. You cannot fight terrorism in part. You have to fight it all.

Question

Prime Minister, still on terrorism, how mandatory are those points discussed and put forward here in Tokyo? For example, what happens if one of those countries comes up with another name of a state that sponsors terrorism?

As I understand the problem here was naming a specific country, Libya. What happens if somebody puts forward another country, another name?

Prime Minister

First, you will note in the statement that all of the countries here—it is in paragraph 4—have decided to apply these measures in our own jurisdictions. We have decided to apply them in respect of any state clearly involved in sponsoring or supporting international state terrorism. Now the one state which is mentioned there, which it is intended against, is Libya because that is clearly state-sponsored [end p12] terrorism and it stands out above all others for the clarity of its intention and the clarity of its methods and so there is no doubt about state-sponsored terrorism there.

At the moment, there is no other country to which those measures apply. If there were distinctive evidence, we should have to agree together to apply those measures to other countries. We should have to agree together.

Question

Prime Minister, you described the anti-terrorism statement as firm, yet it has no provisions for economic sanctions.

a) are you disappointed that there are no provisions for economic sanctions; and

b) without them, how can it really deal more effectively with the problem than have other statements?

Prime Minister

Well there are, of course, some economic sanctions in it, as there are always in these statements. For example, the refusal to export arms to states which sponsor terrorism is very economic, very direct. We have not gone to complete economic sanctions as you know. We have some experience of the application of economic sanctions and having found after 15 years in Rhodesia mandatory economic sanctions approved by the Security Council did not work. When it comes to supplying arms, that I think is in a separate category, and it is absolutely vital that those of us who want to contest terrorism [end p13] should not supply arms and so you are justified in going on a more limited basis there, and that we have done.

Question

Prime Minister, before you came to the Summit, you made a linkage between the Chernobyl experience and verification issues with regard to nuclear arms control. Has the Summit deepened your understanding of that linkage or that issue in any way?

Prime Minister

No. I think other people would agree with the linkage one made, that it is not exactly easy some time after an accident has occurred even to find out what has happened or the extent of what has happened. That shows how difficult it is to verify something in the civil field, even with all modern communications, and it can only be because the Soviet Union did not wish to have it verified.

You must, in fact, translate that practice and that concept and that philosophy to verification in the military field. The purpose of arms control is so we can have security at a lower level of weaponry. Unless you are absolutely certain that nations will do what they say they will do, you do not enhance security; you diminish it. Therefore, [end p14] verification is absolutely critical to the whole arms control process and it means that the verification processes must be detailed and practicable, and I think the difficulties we have had on a civil accident have highlighted that particular point.

Question

Prime Minister, was the so-called Middle East Peace Plan ever discussed during the Summit discussions?

Prime Minister

It was discussed among Heads of State. As you know, a lot of subjects are discussed either with Foreign Ministers or at luncheons and dinners or in the margin or in our bilaterals and a number of us discussed Middle East matters in the margins. I think the Foreign Ministers have discussed it over meals—they discussed it very thoroughly. I also discussed it with President Reagan, but at the moment, there really is not a Middle East peace initiative operative. It is a cause of great concern. I think the last one of King Hussein, which has run into the mud, or maybe I should say the sand, but we have not in fact got a new one, which is something of a worry to all of us. [end p15]

Question

Prime Minister, the US Administration has characterised the economic section in this communique as a move back, a significant step towards managed exchange rates away from the free floating rates that we have had since the collapse at Bretton Wood. How significant do you think the section in the communique on concertation of economic policies, on mutual surveillance and on exchange rate intervention is, and would you also characterise it as a move towards if not fixed exchange rates, some sort of managed exchange rates?

Prime Minister

First, I do not believe in fixed exchange rates. They do not stay fixed, and the reason they do not stay fixed is because the economies to which those exchange rates apply are not similar and they are not following similar policies. Even if they were, you would of course be liable to sudden speculative movements or sudden changes such as the oil price, which would mean that they could not stay fixed. So I think myself that fixed exchange rates are something that we shall not see in our time again for those reasons, and they broke down because they could not endure with both the underlying differences and the sudden surprises which you get.

I think what you might call a managed float became possible because undoubtedly for a variety of reasons, mostly connected with the way in which Japan chose to run her economy, the yen got right out of line with the underlying economy and that was causing many artificialities in the rest of the world economy and it was absolutely right, and I think one congratulates [end p16] all the G5 countries, the Chancellors, and in particular Mr. Baker, who is in the lead, on the way in which they managed the fall of the dollar and the rise of the yen, and that was necessary because the yen was out of kilter with its true value.

The idea of surveillance started, of course, if you look back to the Versailles communique, when we said there is no point in having a world monetary conference. Some people tried to find a formula for exchange rate, and the reason they tried to find a formula is to obviate the need to take measures in their own countries which are tough to take. So at Versailles, we started the idea of surveillance and it was carried on, I think, at the Williamsburg conference and, of course, we are all subject to surveillance by the IMF. If you belong to the IMF, they come and have a look and see how you are doing from time to time and they usually give us a very good report. That has been extended, and I think the combination we have got is much more realistic. It has been very successful. I think we would all congratulate, I repeat, Mr. Baker, on the initiative which he took and on the way it is being carried through.

Chancellor, you would like a word I am sure.

Mr. Lawson

I think, if I may say so, it is quite mistaken to talk simply in terms of the yen. What happened was that the dollar had risen quite absurdly against all currencies and if you look at what has happened since the dollar high of February [end p17] 1985, you will see that the dollar has fallen more or less equally against all the major currencies. Indeed, it has fallen marginally more against the Deutschmark than it has against the yen, and I think it is necessary to be said in order to put into perspective some of the discussions that one has heard recently about the particular problems of the yen. The fact is that the dollar went much too high, quite out of touch with underlying economic reality, and it was desirable to bring that back and that has happened against all currencies and, of course, the Plaza Agreement of September last year played an important part in that and we shall be continuing, as it is said in this communique, to intervene collectively whenever we feel it desirable and useful to do so.

Question

Prime Minister, there has been much talk this week about the problem of subsidised world food surpluses. What are the Summit seven actually going to do about this beyond passing the buck to OECD and what specific action can we expect from Britain during the next six months' presidency in the Common Market?

Prime Minister

I think there is one rather fundamental change which has come about as a result of the Tokyo Summit. Hitherto, it was regarded as a kind of confrontational problem between Europe and United States. They had surpluses and we had surpluses. [end p18] They had subsidies and we had subsidies and we were both trying to compete to sell into a limited market. It actually goes much wider than the United States and Europe. Japan also heavily subsidises her food industry. She does export, but she protects. All of this is having a great effect on developing countries, some of whom rely on agriculture for their main income and would rely on trying to export agricultural products, but they cannot always produce them at the right price.

Instead of regarding it as a confrontational problem, we are now regarding it as a common problem which we have got to solve together. That is the great change which has come about.

Secondly, we agreed that as there has just been started an expert assessment of the options in OECD, that we will come in behind that and in fact lend our support to it. There is no point in having two examinations going on. We will come in and lend our support to it and make together an effort to solve a common problem.

What also is common is that both in Europe and the United States the prosperity of agriculture to many communities is very very important indeed, and so we have to keep that fact in mind. One wants a prosperous agriculture without surpluses, and in our country prosperity of agriculture to the rural communities is important, and we have to have time to adjust.

So we have come in behind the OECD hoping that they will look very carefully at the options which we can then take up.

There is another factor: one of the reasons why some [end p19] countries were against GATT was that the preliminary work on GATT had first produced a report on agriculture and not yet on other things, and some people did not want that discussed first, or at least discussed until some of the other working parties had reported. Agriculture will have to be discussed in GATT, but it helps if we can get some proposals before we go to GATT on how best to deal with the situation jointly.

Question

Prime Minister, how do you think Colonel Gaddafi will respond to the terrorism statement with Libya being mentioned by name?

Prime Minister

Well, I hope that both Libya and any other country which thought of having obvious state-sponsored terrorism would know that the countries of the western world—the seven countries of the western world—including the whole European Economic Community, are prepared to take this sort of action against them and I believe that there could be further action which they could take, which would be a further deterrent, and of course, they now know that the United States is prepared to use force and it is better that a terrorist is uncertain as to whether force can be used in self-defence. If you ever say to a tyrant of any sort, including a terrorist, “No, we shall not use force in self-defence” , then he knows that whatever he does force cannot be used against him and therefore I am afraid he will [end p20] go on and on much further than he would go if there is a known deterrent of both force and other factors.

Question

Prime Minister, can I come back to how you would characterise the economic sections of the communiques you have put out? Would you characterise these economic sections as a move back to, or would you characterise the present system, as managed exchange rates?

Prime Minister

No. When you try to encapsulate in a phrase, inevitably you get inaccurate. You will find in the Summit communique that we are consolidating the successful economic policies. That is very clear. When we first came here, they were not recognised universally as a successful economic policy. We have worked at them, we have worked at the communiques over the year. They are now universally accepted as the right kind of economic policies and that is a great advance.

You have seen and heard both what I have said and what Nigel Lawsonthe Chancellor has said about exchange rates. There is no such thing as fixed exchange rates being fixed for eternity. Because there was not, the whole system broke down. One of the reasons it broke down was because countries were running policies of high inflation, so the whole thing cracked. Another reason was because the economies are so disparate. A third reason is that you can get sudden moves of large sums of money, and [end p21] a fourth reason is that you can get sudden things happening like either an oil price rise or an oil price reduction. So I think that in trying to follow fixed exchange rates you are in difficulty, and there is a further factor: if ever you do have such a policy, it means either that you have to throw precious reserves into defending a particular exchange rate, which only encourages speculators, which is a bad thing to do; or because you have a particular exchange rate, you are compelled to put up interest rates, not for economic reasons but to defend a particular rate.

Those are bad policies for any particular country to do alone and sometimes impossible to do together. Sometimes they can be done together.

Question

You have mentioned twice now that agriculture will come up in the GATT round, but it is not mentioned specifically in the communique. Do you think this weakens the thrust of the argument?

Prime Minister

No. There is plenty in the communique about agriculture. I think it is paragraph 13. We spent a long time on it. Just let me see if my memory is correct. Is it? Yes. “We note with concern that a situation of global surplus etc …” of course it will come up in the GATT round. One of the working parties has been on agriculture and that was the working party [end p22] that in fact reported first. I cannot remember, Nigel, if there are five or six working parties in GATT, but they are working on specific things. It will come up in the GATT round. We are all prepared for it to go to GATT. You cannot have a GATT without it.

Mr. Lawson

Paragraph 12, Peter, just says the new round should inter alia address the issues of trade and services and aspects of intellectual property rights and so on and foreign direct investment. That is not to exclude other matters, and among the other matters which will be very prominently in the GATT round is agriculture.

Prime Minister

The point of the sentence that the Chancellor has just read out is that services are not yet dealt with by GATT and we are very anxious, so far as Britain is concerned, to get them dealt with by GATT and we are all suffering in Britain from the fact that some of our copyrights and our patents are being liberally copied in other countries without royalties. It is rather that we wanted those two things specifically mentioned to ensure that they are considered. There is agreement that agriculture should be discussed; the only question was the timing. [end p23]

Question

Prime Minister, two questions. First, to what extent are you optimistic about the possibility of a Reagan-Gorbachev summit meeting taking place in Washington within this year?

The second question: could you kindly disclose your secret strategy to sell more British whisky to the Japanese market?

Prime Minister

On the last, it will have to be persuasion and the fact that it really will be terrible if whisky is not sold in the Japanese market. It is an extremely good product. There is not another in the world like it. Many people want it and it would be a wanton act of protectionism to make it more difficult to sell in the Japanese market and I hope it will be easier to sell in the Japanese market. I trust I make myself clear on whisky in the Japanese market.

I think that both President Reagan and Secretary-General Gorbachev would like a summit this year, a second summit. I think that both are very much aware it would have to be a summit which produced some positive results, especially in arms control, and I think therefore, and I have made it very clear in all my statements, that it means that the Soviet Union really must negotiate very seriously in Geneva and in Vienna.

You know that once you come to negotiate on arms control and once you get down to detail, as you move into a world of jargon which is really jabberwacky to ordinary people, but it has to be done really at the nitty gritty level and it is no [end p24] earthly good making great statements about prepared to reduce this, that and the other. They have to be translated at the negotiating table into genuine agreements and I think it is important to get some agreements on some of the arms control measures so that they could in fact be officially signed or agreed at a Summit and I believe that is generally understood and the question is whether one can get far enough on the arms control negotiations to get specific results and if that is so, then I believe there will be a Summit and I believe that is what most people hope and I believe it is what President Reagan and Secretary-General Gorbachev hope too.

Foreign Secretary

Could I add a word on the more extended aspect of whisky. I would like to convince our Japanese friends of the central importance of the way in which your economy treats attractive imports from the rest of the world. It is not just whisky. It is all the wine, all the sparkling wine that is produced in Europe. It is a whole range of other things as well, and in fact, the level of duty imposed on imported liquors of that kind is between four times and eight times as much as on your domestically-produced whisky, and the effect of that is to limit enormously the choice of Japanese consumers and to impose severe distortions on that part and on many other parts of the market. [end p25]

Imagine for a moment, what would have happened to the Japanese economy if all Europe and all the United States had sought to deal with imported video tape recorders, had sought to deal with imported cameras, in the same way? Suppose we had taxed imported Japanese cameras, recorders and television sets four times higher than those produced in the United States? Your economic growth would have been stunted, the world prosperity would have been retarded and we should all be much worse off.

This is the key point: the rest of the world has provided, with pleasure, the markets for Japanese production. Japan is a rich and increasingly wealthy country of 120 million people and our case is: open up your market for the sake of faster world growth, for the sake of wider choice for Japanese consumers, for the sake of world prosperity on a larger scale. We have given you the opportunity and we have been delighted to do it, but give us a fair chance in return and we shall enlarge your range of choice and increase world prosperity.

Prime Minister

I think that remark calls for a round of applause. That is terrific.

Question

Prime Minister, you said you came to the Summit knowing what you wanted. You seem to have been remarkably successful in getting it. How did you do it? [end p26]

Prime Minister

I would not care to reveal the magic formula, others might cotton on to it.

I could of course say the excellence of argument, the total support of Nigel Lawsona marvellous Chancellor and Sir Geoffrey HoweForeign Secretary and the fact that the arguments were good. We were right.

Question

You also are the senior summiteer.

Prime Minister

Yes, I might be the senior summiteer because I am more right more often than my opponents.

Question

Prime Minister, you are very tough on terrorism and in the Japanese press reported that you pushed Mr. Nakasone to the corner because Mr. Nakasone did not want to put the name of Libya in the statement and that his political position was weakened by your toughness. How do you comment on this report?

Prime Minister

I did not push Mr. Nakasone in any corner. We genuinely argued these matters. We genuinely reached the right conclusion and I would like to pay tribute to Mr. Nakasone. He chaired the whole Summit meeting superbly and I cannot speak too highly of the way he did it. [end p27]

Question

I would like to ask a question about terrorism. About the prohibition of arms sales to Libya. Does it bind also indirect arms sales to Libya also? In other words, there are some companies in the western world which have their offices and manufacturing production factories even within the western world outside of members of the seven countries which could be functioning in indirect arms sales to Libya, or there is the theoretical possibility that, for example, an arms sale from one of the seven countries to some country in the Middle East and this country could provide imported arms from the west to Libya. Is this an implication of the communique to ban this kind of deal?

Prime Minister

This is direct arms sales to Libya, but when you are selling to other countries you usually have something called an “end user certificate” under which they agree not to pass those arms on. I regret to say, in spite of all that, there is a black market in arms which I am afraid is very difficult to stop. With direct sales to Libya and to other countries you would usually have as I say an end user certificate that they should not pass it on to Libya.

Question

Prime Minister, Mr. Reagan has characterised Gaddafi as a mad dog. What would you call him? [end p28]

Prime Minister

I am not in the business of characterising heads of state. I think, however, that Colonel Gaddafi has pursued terrorism as head of state of Libya as a political weapon. That is a form of tyranny and in a way is a form of war on innocent people and it is totally unacceptable and that is why the action has been taken that you know about, and that is why Europe and the United States and Japan have agreed to take non-military measures and have agreed to keep in contact over further measures to do everything we can to deter that terrorism by that state and the extension of that terrorism to other states.

Question

Is it not overly expedient, not to say hypocritical, to insist on the naming of Libya in this statement while not one mention is made about France and its state-sponsored terrorism in Auckland Harbour last year? You insist on the provision of evidence, the naming of a state, I would guess rightly the New Zealand Government has plenty of evidence for you about French terrorism. Why no mention?

Prime Minister

The two are totally different and I do not intend therefore to waste time on it. I am so sorry. The two are totally different. If anyone confuses them, then I am sorry, there is no point in wasting time on it. [end p29]

Question

Prime Minister, on the question of terrorism in the air, how confident are you that the measures adopted will eliminate danger to civil aviation?

Prime Minister

I believe the measures adopted will be a considerable deterrent to state-sponsored terrorism. I do not think it is possible to eliminate all terrorism. Terrorism is a manifestation of violence. It is not possible, I am afraid, to eliminate violence in our societies. In our own societies we take action through our police forces and by the law and by involving the community in action against crime. There is no such thing as a kind of international law that we have in national law. We therefore have to take this kind of measure to deter terrorism, but to eliminate it, well when you can eliminate violence you will eliminate terrorism, but I am afraid you have come to the fundamental nature of man and there has been violence since Cain and Abel.

Foreign Secretary

If I can add just one sentence to that. Those of you who were at the London Summit two years ago will remember that at that Summit the Summit Seven made their first commitment to action against international terrorism and it was a very tentative one. Since then, we have been working in the European Community and within the Summit countries to get a [end p30] plain commitment to a firm and effective programme across the board and this Summit conclusion, taken alongside the measures agreed in Europe, does amount to what it sets out in the document as being—a commitment to determined tenacious, discrete and patient action combining national measures with international cooperation. This is the result of a great deal of hard work, putting together a programme for effective collective action, which is the best defence we have got against violence of this kind.

Prime Minister

There you are, that is the last time I have not had the last word.