Britain and Japan remained deadlockedtoday over trade policies, and political sources said the U.K.
Government was pinning hopes for a breakthrough on the trip to
Tokyo next week by Corporate Affairs Minister Michael Howard.
    Howard told Reuters he would try to "promote understanding
on trade issues" during his trip, which starts tomorrow.
    Meanwhile, Britain will re-examine a letter from Japan's
prime minister promising his personal help for a solution to
the row over a U.K. Firm's bid to win a significant role in
Japan's liberalised telecommunications market, government
sources said.
    Tensions have risen following the decision by Britain to
arm itself early with new statutory powers which it says could
be used against certain Japanese financial insitutions.
    Britain had reacted optimistically at first to the letter
from Japanese leader Yasuhiro Nakasone to U.K. Prime Minister
Margaret Thatcher. It had been seen as a signal that he would
work towards ensuring a satisfactory outcome to the bid
launched by Cable and Wireless Plc &lt;CAWL.L>, officials said.
    But this view has been clouded by reports from Tokyo that
Nakasone's assurances really constituted little more than
politeness in the face of loud British anger, they added.
    Howard said he would use his trip to push for a bigger role
in Japan's telecommunications industry for Cable and Wireless
Plc. The U.K. Government has made the issue a test case for
Japan's willingness to open its markets adequately to outside
competition.
    Asked whether the letter from Nakasone was a rejection of
attempts by Britain to achieve that, Howard said "I am not sure
it is correct to regard Mr Nakasone's letter as a rejection of
Mrs Thatcher's request of him - and it says he is taking a
personal interest in this problem."
    "I don't understand it to be closed at all."
    During his visit to Tokyo, Howard said "I shall be talking
to them about it (the letter), finding out exactly what they do
mean about it, and making it plain that we take a very serious
view of the fact that access to Japanese markets is not as free
as we allow acces to our markets to be."
    He noted that under the new Financial Services Act, Britain
could revoke or deny licences to Japanese banking and insurance
institutions in London if U.K. Firms fail to get receive
similar treatment in financial markets in Japan soon.
    "I hope it won't come to that, and I don't think it will,"
Howard added.
    Officials involved in Howard's Tokyo itinerary said they
had tried to arrange meetings with Japanese officials who were
least likely to see trade issues in too a parochial a light.
 Reuter
