I should like to extend to all of you a very warm welcome to No. 10 Downing Street for this lunch to celebrate the Second Conference of the UK/Japan 2000 Group.

You are all very distinguished and very busy men of achievement, as scholars, manufacturers, and providers of services. We are, therefore, particularly grateful to you for finding the time to attend the Conference, and for turning your wisdom to [end p1] analysing the problems within our two societies and in the relations between them.

Britain and Japan

Britain and Japan have more in common than most people instinctively think.

We both have constitutional monarchies and a firm commitment to democracy.

We both attach particular importance in [end p2] our cultures to knowledge, science and progress.

As island peoples we are outward looking and depend on trade.

Britain has been a remarkable source of ideas and inventions and for centuries led the world in trade and manufacturing.

Japan has sent out to the world highly sophisticated products and business methods. [end p3]

I hope that your Group can help build on these complementary aspects of our relations.

We in Britain need to reach out to understand your distinctive way of life. We need to study your industrial and business techniques.

I hope that you in turn will study what we can offer in science and technology, and in marketing and design. [end p4]

I also hope that your meetings can help us get away from seeing our relations as a trial of strength, with the emphasis on competition and threats.

I might draw an analogy with chemistry. In many chemical reactions when two ingredients are mixed and change into one more complex structure, heat is given off. There's bound to be some heat given off as Britain and Japan compete. [end p5]

But heat also creates energy and drive, and that's what we want to see: heat to warm our friendship, energy to overcome our problems. [end p6]

Trade

One of my most basic beliefs is that the task of Government is to let individuals and companies get on with life and to remove artificial obstacles and impediments to this.

That is why I want to see the barriers to trade or to the movement of capital or of people come down.

Britain needs to be able to develop a [end p7] range of markets in Japan, and to be given the opportunity to satisfy them—just as you do here, where Japanese products are respected and liked by consumers.

In Britain, our exports of manufactured goods are higher in absolute terms than ever before. Some of our exporters have been successful in Japan.

To sell £1 billion worth of goods is a [end p8] success by any definition.

Yet we have only 1.7 per cent of your imports.

This is much too low.

I hope that your conference has not only analysed the reasons for this, but has also identified remedies.

Many of you are in a position to put those remedies into effect.

I hope that your analysis and [end p9] recommendations will go forward through the Study Group set up by Mr. Nakasone last October.

We have to face the fact that the current imbalance in trade between Britain and Japan and between Europe and Japan is very widely seen by our people as something basically unfair and even unacceptable.

I know that to a very great extent it [end p10] stems from the excellence of your production methods, your competitiveness and the skill of your exporters.

But there is an area beyond that where we need to see really effective action—more, much more than has yet been taken by Government and business in Japan to change attitudes towards imports. [end p11]

Investment

I understand that you have also discussed joint ventures and investment.

We have a lot of experience of those in the UK, both with American firms like Ford and IBM, as well as close partnerships with our European neighbours.

We are developing new consortia like Airbus Industries, and putting together cooperative tenders like the very [end p12] successful one for China's Guangdong Nuclear Power Station.

We would be happy to have more with Japan. No doubt you have also talked about sources of supply for new Japanese manufactures produced in the UK.

I would give you as an example the very effective way in which Marks and Spencer have built up the quality and performance of their suppliers. [end p13]

Financial Markets

We can also work better together in the field of financial relations.

I have been pleased to see the yen strengthen to more realistic levels in recent months.

And the financial markets in Tokyo increasingly complement those in London and New York—to the great benefit of us all. [end p14]

I know that changes which would help to liberalise the Japanese markets have now been agreed.

It is most important that they should be put into effect with all speed.

Exchanges

Finally, we should encourage the exchange of ideas and of people.

Recent years have seen a growth in the [end p15] number of student exchanges.

Some very generous grants have been made to encourage the study of Japan and the Japanese language in British universities. Toyota and Suntory have been most generous benefactors of the LSE.

All this is splendid.

But we can do more, for example, by encouraging Japanese executives and others to learn English, and by urging British [end p16] executives to learn more about Japan, the Japanese language and Japanese management techniques.

At present we have about 360 Japanese students in higher education in the UK. This is about the same number as from Brazil.

But far fewer than the 1,800 from Iraq. [end p17]

Conclusion

Let me end by asking our Japanese guests to convey my warmest regards and respects to your Prime Minister, Mr. Nakasone, who has shown himself such a strong leader and effective spokesman for Japan.

And let me also ask you to join me in a toast to the future of 2000 Group and good relations between Britain and Japan.