th aid Food

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THIS DOCUMENT I S THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT

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CABINET

CONCLUSIONS o f a Meeting of the Cabinet held a t 10 Downing S t r e e t on THURSDAY 27 APRIL 1989 a t 10.00 am

P R E S E N T The R t Hon Margaret Thatcher MP Prime M i n i s t e r The R t Hon Nigel Iawson MP Chancellor o f the Exchequer

Rt Hon S i r Geoffrey How^f ‫־‬tary of S t a t e f o r F o r e i th Affairs Rt Hon Lord Mackay o f Clashf! ‫־‬1d Chancellor

The R t Hon Douglas Hurd MP Secretary o f State f o r the Heine Department 2 R t Hon George Younger MP t a r y o f State f o r Defence

Rt Hon Peter Walker MP Secretary of S t a t e f o r Wales Die Rt Hon Norman Fcwler MP Secretary of S t a t e f o r Employment Die Rt Heal Nicholas R i d l e y MP Secretary of S t a t e f o r the Environment

Hon Tern King MP of State f o r Northern I r e l a n d Lord Young o f Graffham State f o r Trade and

He Rt Hon Kenneth Baker MP Secretary o f S t a t e f o r Education Science

The R t HdkKenneth C l a r k e QC MP Secretary o f State f o r Health

Die Rt John MaoGregor MP Kimster of A g r i c u l t u r e , F i s h e r i e s

The R t H O T Mala«m]$fkirri QC MP Secretary of StaS»^p^Jcotland

aid Food Be Rt Hon Paul Channon MP Secretary o f S t a t e f o r Transport

The R t Hon John Moo: Secretary o f State f o r

The Rt Hon John Wakeham MP Lord President o f the Council

The R t Hen The Lord B e l Lord Privy Seal

The Rt Hon C e c i l Parkinson MP Secretary o f S t a t e f o r Energy

The R t Hen John Major MP Chief Secretary, Treasury

The R t Hon Antony Newton MP Chancellor o f t h e Duchy of Lancaster

!CONFIDENTIAL]

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THE FOLLOWING WERE ALSO !RESENT The Rt Hon Peter Brooke MP Paymaster General

avid Waddington QC MP S e c r e t a r y , Treasury

SECRETARIAT S i r Robin B u t l e r Mr R G I a v e l l e Mr Ρ J Weston • Mr A J Langdon MT S S Murriy

(Items (Items (Items (Items

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and and and and

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C O N T E N T S Page

Subject

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PARLIAMENTARY

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Water B i l l HOME AFFAIRS Abolition

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Contamination

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General

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St

Fergus

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Industrial

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the

Monopolies Supply

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FOREIGN AFFAIRS Short Range Nuclear Forces i n Europe

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Republic of South A f r i c a

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Anglo-Iranian R e l a t i o n s

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Japan S o v i e t Union Jordan China

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Canada 11

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Subject COMMUNITY AFFAIRS Foreign A f f a i r s Council 24 A p r i l

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A g r i c u l t u r e Council 17-22 A p r i l

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s i t t o Washington by M i n i s t e r of A g r i c u l t u r e , e r i e s and Food

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Motors UK

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Competence

111

1. The Cabinet were informed o f t h e business t o be taken i n the House of Cannons i n t h e following week.

Previous Reference: CC(89) 8.1

ΊΗΕ LORD PRIVY SEAL s a i d t h a t l o r d Nugent of Guildford had t a b l e d amendments f o r consideration a t Committee Stage o f t h e a t e r B i l l i n t h e following week which sought t o provide that, £her than becoming p u b l i c l i m i t e d companies, t h e newly t i s e d water undertakings should be based on t h e e x i s t i n g te s t a t u t o r y water catpany (SWC) model, w i t h c o n t r o l s being on dividend payments and assignment of funds t o reserves t o p r i c e s . Lord Nugent had tabled f u r t h e r its, which would probably not be reached f o r a f u r t h e r forft&Lght, which sought t o provide t h a t the a s s e t s which t h e water a u t h o r i t i e s had held when they had been t r a n s f e r r e d f r a n l o c a l authority c o n t r o l i n 1973 should be returned t o them a f t e r p r i v a t i s a t i o n ^ I h e Government would be strongly r e s i s t i n g both proposals 1(Γ ν L

I n a b r i e f dMjgjBfeion, i t was noted t h a t many o f the SWCs had r e c e n t l y i n c r f e ^ ^ y t h e i r water charges by very l a r g e amounts. The point was aiswKrade t h a t i t was questionable whether the House o f Lords Ξ Λ « Κ < | ^ 3 considering amendments t o the B i l l which would, i f c a r r i e d ^ involve s u b s t a n t i a l l o s s e s t o t h e Exchequer. THE PRIME MINISTER, Cabinet agreed t h a t resisted. ,

the discussion, s a i d t h a t the it's amendments should be f i r m l y

Ihe Cabinet -

Took note.

IEME AFFAIRS Abolition o f the Dock Labour Scheme Previous Reference: 0C(89)14.2

2. THE SECRETARY OF STATE FOR EMPLOYMENT s a i d t h a t i t was now that l e g i s l a t i o n three weeks s i n c e t h e Government had Scheme: the B i l l would be introduced t o a b o l i s h t h e Dock Committee i n t o secure t h i s was under consideration i n currently the House o f Commons; and no i n d u s t r i a l taking place. There had been s u r p r i s i n g l y f s i n c e the Cabinet had discussed t h e matter a t meeting. The Transport and General Workers Uniol c a l l a s t r i k e b a l l o t , but the union had not y e t d< p r e c i s e form o f t h e question on which t h e i r members consulted and t h e b a l l o t papers were n o t expected ' the following week. Mr B i l l Morris, t h e union's de] s e c r e t a r y , had w r i t t e n t o a l l r e g i s t e r e d port emp them i n d i v i d u a l l y t o enter i n t o n a t i o n a l negotiations ‫ו‬

sought r e p l i e s by noon on 28 A p r i l , !here would probably be seme i n d u s t r i a l a c t i o n , but not i n the immediate f u t u r e : i t was now thought t h a t 2 2 May was the e a r l i e s t date on which i n d u s t r i a l a c t i o n could begin. Almost without exception, t h e n a t i o n a l and r e g i o n a l press had supported the Government's d e c i s i o n t o end the Dock labour Scheme. Λ

^>/*) THE PRIME MINISTER s a i d t h a t i t was important for the < ^ ‫ ׳‬/ / ^ Government t o keep the arguments f o r the Government's p o s i t i o n front o f the p u b l i c and t o s u s t a i n the momentum o f the B i l l >^^».that i f any i n d u s t r i a l a c t i o n should take place i t would have a s much progress a s p o s s i b l e by t h a t time.

Contamination of Baby Food

THE HOME SECRETARY s a i d t h a t seventeen incidents had been reported between 7 and 2 5 A p r i l of baby food having been a f u r t h e r eleven incidents had been reported contamina day. A number o f these were c l e a r l y examples o f on the ρ t i o n and were the subject of p o l i c e delibera t e d by the Metropolitan P o l i c e . There was inquiries p f further "copy c a t " incidents. I t was not new an obvi< containers were always tamper proof and c l e a r whether were considering with h i s department the Department on was required. whether some The Cabinet 1.

Took note

THE SECRETARY OF STATE FOR HEAKB^Sj&d t h a t the B r i t i s h Medical General Practitioners' A s s o c i a t i o n (EMA) was t h a t day nc&a&yKa conference o f delegates from i t s L o c a l Medical eamlittees t o consider the Remuneration A s s o c i a t i o n ' s p o s i t i o n i n the l c n g J ^ a n d i n g negotiations on a new contract f o r general p r a c t i t i o n e r s (GPs). He b e l i e v e d that Previous the EMA's negotiators wished t o control the s i t u a t i o n s o t h a t Reference: they emerged from the conference with a mandSfce t o continue CC(89)13.2 interest negotiating, and i t was very much i n the order t o t h a t the c o n t r a c t should new be s w i f t l y i n the White disengage t h i s question from the i s s u e s d , which Paper on the reform o f the National Health e would be implemented by the Health Services B i following s e s s i o n . The EMA's leaders had, stimulated an extraordinary degree of opposition contract and they might f i n d t h a t the s i t u a t i o n had t h e i r c o n t r o l , arid t h a t t h e i r members refused them negotiating mandate. I t should become c l e a r w i t h i n weeks whether the question of the contract could be negotiated b a s i s : i f i t could not be s o s e t t l e d , he woul

t o cane t o Parliament with h i s own proposals. Once t h e question o f t h e c o n t r a c t was s e t t l e d , the Government would be able t o concentrate on t h e p r e s e n t a t i o n o f i t s proposals f o r the reform of the NHS, where t h e e s s e n t i a l point t o s t r e s s would again be the Government's prime concern with achieving the most e f f e c t i v e provision o f p a t i e n t c a r e . A t present t h e EMA had clouded t h e i s s u e s by an extensive p u b l i c i t y campaign which ^ ^ J n straddled the GP's c o n t r a c t and the NHS reform i s s u e s , and which / ^ p a i n t e d a p i c t u r e of doctors concerned t o protect p a t i e n t care / / ^ G g a i n s t a Government t h a t was motivated s o l e l y by c o s t - c u t t i n g . ^ y r j ^ s t r a v e s t y o f the f a c t s was being promoted by the EMA i n a v^\u<&7 extensive carrpaign which included l e a f l e t i n g i n doctors' i e s and a great deed, o f n a t i o n a l advertising, and t h i s l y made i t s impact i n the media. The Government had, ρέτ, a very good s t o r y t o t e l l , and he would continue t o i s e a s vigorously a s p o s s i b l e t h a t i t was t h e Government's proposals t h a t represented true concern f o r t h e c a r e of p a t i e n t s . I n d is c u s ^ ^ ^ ^ h

following main p o i n t s were made.

on which t h e doctors f e l t most strongly a. ‫׳‬Ihe contract and t h e proposal t h a t GPs should were t h e te w i t h i n a drugs budget. The f i r s t of be required pay t o performance, while t h e second these d i d mu! o v e r p r e s c r i b i n g that wasted money t h a t was needed t o elsewhere i n the NHS. Although the could otherwise proposals as an a t t a c k on the EMA's p r e s e n t a t i vulnerable patients was wholly care o f e l d e r l y ign was c a l c u l a t e d t o make a irresponsible, the v i v i d impact i n t h e media found the Government's b. Since many s e c t i o n s ' argument l e s s newsworthy c a r e f u l presentation of i t was e s s e n t i a l t h a t t h e than t h e Government should use every p r o p e r ^ device t o g e t i t s s t o r y a c r o s s . v i w w a s not altogether c l e a r hew the conventions on paid Goverapent p u b l i c i t y applied, f o r example, t o advertisements c a r r y i n g c e r t a i n kinds o f messages from the Secretary o f S t a t e f o r Health, and t h i s question should be urgently examined. c. Although many doctors saw t h e need' welcomed the Government's approach, i t courage for them t o speak out, s i n c e the was dominated by s e l f - i n t e r e s t e d elements change i n t h e i r p r i v i l e g e d p o s i t i o n . I t woul be important t h a t a s the preparation for the Η ices B i l l proceeded, those doctors and NHS managers whqr^H^S^ t o co-operate with the Government's proposals on, f o r s e l f governing h o s p i t a l s should be encouraged t o exjJ t h e i r support. The p o s i t i o n on t h a t issue would be c l e a r e r i n June, by when h o s p i t a l s should have respond the general i n v i t a t i o n t o express t h e i r i n t e r e s t .

!CONFIDENTIAL]

I I

d. There were a number of simple, e a s i l y grasped, f i g u r e s t h a t made manifest the need f o r the changes i n the management of the NHS which the Government was proposing. A good example was the numbers o f s i m i l a r operations t h a t were performed by surgeons i n d i f f e r e n t h o s p i t a l s . These f i g u r e s provided t e l l i n g support f o r the Government's case, and more p u b l i c r e f e r e n c e should be made t o them, though i t would not be r i g h t t o use them i n a way t h a t would a t t r a c t c r i t i c i s m a s a personalised a t t a c k on doctors' c l i n i c a l judgement. S‫״‬i?&• The medical profession had a long h i s t o r y o f h y s t e r i c a l <£^3£position t o proposals f o r change, but of q u i c k l y ^v^fc^mmodating i t s e l f t o new r e a l i t i e s i n the event. The ^ ^ c t o r s had, f o r example, vigorously opposed the introduction the s e l e c t e d l i s t o f drugs, but they had accepted t h e changes a s soon a s they were made and the savings had been used f o r the b e n e f i t o f the NHS. I t was very l i k e l y t h a t t h e GP's cartfS&ct would s i m i l a r l y be accepted by the p r o f e s s i o n as s o o w a s i l t began t o take a c t u a l e f f e c t . THE PRIME summing up the discussion, s a i d t h a t t h e EMA's distort: the Government's proposals on t h e GP's contract and of the NHS, and i t s appeal t o p a t i e n t s t o oppose t h e t ' s plans, showed a lamentable l a c k o f p r o f e s s i o n a l ethi' e r t h e l e s s the Government had an overwhelmingly stroi on both i s s u e s and everything p o s s i b l e should be d< t h a t i t was f u l l y understood i n the country. More d be made of simple f a c t s t h a t demonstrated the need changes i n the NHS and the Secretary o f S t a t e f o r ould consider, i n the l i g h t o f advice from the Cabinet Off, further m a t e r i a l t h a t he might disseminate w i t h i n the t i o n s on paid Government publicity The Cabinet 2. Took note, with approval >^f the Prime M i n i s t e r ' s summing up o f the d i s c u s s i o n and i n v i t e d the S e c r e t a r y o f S t a t e f o r H e a l t h t o proceed a s the Prime M i n i s t e r had indicated. ‫׳‬

St Fergus THE SECRETARY OF STATE FOR ENERGY s a i d that the as North North Sea Gas Sea gas terminal had been closed down the p r e v i c x S ^ jnoan Terminal following the d i s c o v e r y during a routine inspection <5 tefect i n the machinery which appeared t o pose a p o t e n t i a l safety. The present s i g n s were t h a t i t would be poss r e p a i r the d e f e c t r e l a t i v e l y q u i c k l y and that the plant: resume production i n two t o three weeks. S t Fergus was gathering complex f o r the northern North Sea b a s i n and th< k

would be a considerable f a l l - o f f i n production of gas there while the p l a n t was closed. However, there was u n l i k e l y t o be any s i g n f i c a n t inpact on the balance of payments s i n c e B r i t i s h Gas would be able t o obtain the r e q u i s i t e supplies from other f i e l d s . The i n c i d e n t provided an example of the e f f e c t i v e working of the s a f e t y arrangements, s i n c e the defect had been discovered during a routine inspection by the canpany and n e i t h e r the workers a t the p l a n t nor those l i v i n g i n the area been endangered.

Irttustrial Action on the london Underground Previous Reference: CC(89) 14.2

Y OF STATE FOR TRANSPORT s a i d that there were now or p o t e n t i a l disputes involving the London F i r s t , a s he had informed the Cabinet a t t h e i r previous meeting, d r i v e r s of one-person operated t r a i n s had staged an u n o f f i c i a l 24 hour s t r i k e on the previous Thursday i n claim, back-dated t o 1985, which sought t o p u r s u i t of f e r e n t i a l s with d r i v e r s of two-person operated restore it and the unions would be meeting on 2 May t r a i n s . Th! i v i t y deal f o r one-person operator d r i v e r s to discuss a maintained would be s e l f - f i n a n c i n g and which London i n t e r e s t e d colleagues about t h i s , he would be w r i were strongly r e s i s t i n g the Second, the r a i l implementation of a t i o n i n the Fennel 1 Committee report on the King f i r e d i s a s t e r that the system of promotion f o r s t a t i o n d i n future be based on merit r a t h e r than on s e n i o r i the annual pay negotiations might lead t o a f u r t h e r but i t was too e a r l y t o judge the l i k e l i h o o d of t h i s . 1

I n d i s c u s s i o n , the p o i n t was have no sympathy f o r i n d u s t r i base promotion on m e r i t r a t h e r r i s k t h a t discontent about transpo E a s t would be fanned by any s t r i k e

1

t , while the p u b l i c would on against a proposal t o s e n i o r i t y , there was a i n the Southt took place.

THE HUME MINISTER, sunning up a b r i e f discussion, s a i d t h a t , i f i t looked l i k e l y t h a t i n d u s t r i a l a c t i o n would continue a f t e r the t a l k s on the following Tuesday, there was a^e&png case f o r e i t h e r the Secretary of S t a t e f o r Transpor^orvjondon Underground t o inform the p u b l i c , p o s s i b l y advertisements i n the national press, of management's case, and the Secretary of State should s e t i n hand the necessary preparations basis. The Cabinet

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3. Took note, with approval, of the Prime summing up of the d i s c u s s i o n and i n v i t e d the Secre S t a t e f o r Transport t o be guided accordingly.

l i e s and THE SECRETARY OF STATE FOR TRADE AND INDUSTRY s a i d t h a t there had been a v e r y l a r g e l e t t e r - w r i t i n g cairpaign a g a i n s t the .on recommendations i n the Monopolies and Mergers Carmission (MMC) the Report on the Supply of Beer. While the d e c i s i o n whether t o Beer accept the MMC's reccrmendations was a matter f o r him, he would be holding d i s c u s s i o n s with i n t e r e s t e d colleagues. Cabinet Took note.

V

3 . ^ H E FOREIGN AND COMMONWEAUffl SECRETARY s a i d t h a t the posr^jon which had emerged from recent d i s c u s s i o n s among the c o a l i t i o n p a r t n e r s of the Federal German Government appeared t o c a s t doubt on the need f o r land based nuclear systems i n Europe Short Range Nuclear Forces and c a l l e d >£SsNearly negotiations on s h o r t range n u c l e a r m i s s i l e s afp ngblear a r t i l l e r y s h e l l s . I t a l s o implied t h a t the in Europe North A t ! t y Organisation (NATO) might w e l l not need a replacement e x i s t i n g Lance m i s s i l e when i t came t o take a d e c i s i o n on t i n 1992. T h i s was a v e r y u n a t t r a c t i v e position for t h The United S t a t e s Administration had already spoken the Federal German Foreign and Defence Ministers, Herr Herr Stoltenberg, during t h e i r recent v i s i t t o W; There were signs t h a t the awfulness of the German p o s i t i ! and the way i t had been handled had s t i f f e n e d American de on. The minimum necessary p o s i t i o n f o r NATO was on the long-term requirement for e f f e c t i v e and up-to-date [e nuclear f o r c e s (SNF) and on i t s r e s i s t a n c e t o arms con p t i a t i o n s about them. He himself had spoken on the t o Herr Genscher the preceding evening. The l a t l e a s t made c l e a r t h a t the German p o s i t i o n paper was a i o n a l p o s i t i o n which he iance a s a whole. The r e a l i s e d could not be inposed d addressed the Federal German Chancellor, Herr ging t h a t he had spoken Bundestag t h a t morning. I t was toughly about Soviet preponderance i n such weapons systems and t h e i r unwillingness t o make reductions and had re-affirmed the need f o r e f f e c t i v e NATO defence together w i ^ i ^ v continued w i l l i n g n e s s f o r dialogue with the E a s t . H4(ba
I n a b r i e f d i s c u s s i o n , i t was noted t h a t the P r i would be seeing Herr Kohl on 30 A p r i l which would' valuable opportunity t o t r y t o s t e e r Herr Kohl back" d i r e c t i o n of what he had e a r l i e r described as h i s convictions on the subject, which were more orthodox, was p o s s i b l e t h a t these had s i n c e been modified by the d e t e r i o r a t i n g domestic p o l i t i c a l s i t u a t i o n i n Germany. Kohl had spoken a t the time of the European Council i n Rhc

1988 of the need f o r a d e c i s i o n on SNF before the European e l e c t i o n s i n 1989. But he had a l s o spoken a t the same time about h i s determination t o extend the period of obligatory m i l i t a r y s e r v i c e from 15 t o 18 months t o help cope with demographic p r e s s u r e s . T h i s d e c i s i o n a l s o he had now reversed. Herr Genscher's apparently u n q u a l i f i e d b e l i e f on the change of Soviet a t t i t u d e under President Gorbachev had had an impact on \ > ^ \ German p u b l i c opinion. I f c e n t r e r i g h t convictions i n Germany ^ ^ ( Y ^ ^ b o u t the need f o r s u r e defence c o l l a p s e d i n the face of IJy'y'L Gorbachev, there was a danger t h a t e i t h e r the extreme l e f t v^alOthe extreme r i g h t would p r o f i t i n e l e c t o r a l terms.

>S/J

Republic of South A f r i c a Previous Reference CC(88) 32.3

2^)RE THE^JpREIGN AND OCMMONWEAIIIH SECRETARY s a i d t h a t f i v e men including three United Kingdom c i t i z e n s and an administrative o f f i c e r of the South A f r i c a n Embassy i n P a r i s had been arrested there on 2 i l i n connection w i t h the t h e f t and supply t o South A f r j Northern I r e l a n d l o y a l i s t s of technology f o r Javelin pe m i s s i l e s , and the supply of arms t o loyalists *88. T h i s had been a major success f o r the B r i t i s h and i t y s e r v i c e s . The French j u d i c i a l process was 1 ke many months. The South A f r i c a n S t a t e Arms Corpo Armscor, was almost c e r t a i n l y involved as intermediary t r a f f i c . Whether the South A f r i c a n Government as such involved was not c l e a r , against the background of c o n t i ry between the m i l i t a r y and the Government i n South South A f r i c a n Ambassador i n London had been I d t h a t the Government deplored what had occurred, s t e r and he had a l s o r a i s e d the matter when the Finance Minister, Mr Β J du P l e s s i s , had c a l l e d t h a t week. The l a t t e r them probably r e a l i s e d t h a t those r i c a n s concerned had behaved very f o o l i s h l y . I t it to avoid jeopardising Government. the new dialogue w i t h the South

I n a b r i e f d i s c u s s i o n , i t was noted €hat Mr du P l e s s i s was a p o l i t i c i a n of outstanding q u a l i t y who was anxious t o move ahead toward reform i n South A f r i c a , r e a l i s i n g country would progress were be p o l i t i c a l l y and economically doomed i f committed not achieved. I t was a l s o noted t h a t the s i g n i f i c a n t resources and some 70 members of ity ption of forces t o the case. As i n the previous cothe arms-running s h i p "Eksund", they were cent .the operate very f u l l y with t h e i r B r i t i s h Secretary of State f o r Northern I r e l a n d had been the French M i n i s t e r of the I n t e r i o r personally f o r h i s v i s i t t o P a r i s on 26 A p r i l .

Ιο-Iranian ions

Japan

Previous Reference: CC(88) 29.2

Soviet Union Previous Reference: 0C(88) 3 8 . 3

ΊΗΕ FOREIGN AND caWONWEAETH SECRETARY s a i d t h a t I r a n had e a r l i e r t h a t week announced the expulsion o f 18 B r i t i s h c i t i z e n s . T h i s was e v i d e n t l y i n response t o the Government's d e c i s i o n i n March t o expel from the United Kingdom 18 I r a n i a n s who had been regarded a s s e c u r i t y r i s k s i n the context o f the t h r e a t s t o B r i t i s h l i f e and property during the Rushdie a f f a i r . I n t h i s l a t e s t move I r a n appeared t o have found i t d i f f i c u l t t o i d e n t i f y s u f f i c i e n t B r i t i s h n a t i o n a l s t o expel. E i g h t o f those were already out o f I r a n when the announcement was made, would only be 12 B r i t i s h s u b j e c t s l e f t i n I r a n including e r Cooper, together with seme 150 B r i t i s h wives o f I r a n i a n bnals. One o f those on the l a t e s t I r a n i a n l i s t was a Mr en, a frequent offender a g a i n s t I r a n i a n law who was y being held i n p r i s o n on fraud charges. I h e t were nevertheless asking Sweden a s the protector o f i n t e r e s t s i n I r a n t o make representations on h i s behalf, More g e n e r a l l y , the p o l i t i c a l t i d e i n I r a n was s t i l l running i n a r a d i c a l d i r e c t i o n . The V i c e M i n i s t e r o f Foreign j a n i , had been dismissed a f t e r a l l e g a t i o n s o f Affairs, I r a n i a n Permanent Representative a t the United espionage l e d . Both had s i n c e disappeared from Nations ha! t h a t the I r a n i a n Foreign Minister, Dr p u b l i c view of the I r a n i a n Parliament, Mr V e l a y a t i , and place, !here would be e l e c t i o n s o f a R a f s a n j a n i , w< Mr R a f s a n j a n i would stand again a s kind during the Speaker.

ΊΗΕ FOREIGN AND s a i d t h a t the Japanese Prime Minister, Mr Noboru had announced on 25 A p r i l h i s intention t o resign as e D i e t adopted the 1989/90 budget, which would probably t i l w e l l i n t o the month o f May. So f a r i t appeared t h a t t a was g u i l t y o f misleading Parliament r a t h e r than wrongdoing, but there was evidence t h a t he and h i s P r i v a t e S e c r e t a r y had r e c e i v e d the equivalent o f £1 m i l l ! The g r e a t concern from Japanese industry, the bureaucracy and w i t h i n the r u l i n g l i b e r a l party a t the Japanese Government's i n a b i l i t y t o push through the budget had forced Mr Takeshita ‫ י‬s£S5rd. i h e most l i k e l y replacement f o r him a s Prime Minist&r'ws^ Mr Masayoshi I to, a former M i n i s t r y o f A g r i c u l t u r e b u r e a n e ^ P s & o was i n h i s l a t e seventies.

THE FOREIGN AND CCMMONWEAIIH SECRETARY s a i d t h a t P r e s i Gorbachev had e a r l i e r t h a t week removed from the Cen‫־‬ Committee o f the Communist Party o f the Soviet Union 1' candidate members, most o f them p o l i t i c a l deadwood people who had f a i l e d the t e s t o f recent e l e c t i o n s f o r th) Supreme S o v i e t . The most well-known departure among these Mr Andrei Grcmyko who thus ended a very long p o l i t i c a l 8

s t r e t c h i n g back t o t h e Molotov/Rikbentrcp Pact. C e n t r a l Canmittee would be a slimmed down body.

I h e new

THE FOREIGN AND OCMMDNWEAUIH SECRETARY s a i d t h a t t h e r e had been q u i t e s e r i o u s r i o t s i n a number of towns i n Jordan from 18 t o 22 ril. The main cause had been discontent a t p r i c e r i s e s t i n g from t h e economic reforms negotiated w i t h t h e t i o n a l Monetary Fund (IMF). !here was no evidence t h a t i o t s had been i n s p i r e d p o l i t i c a l l y by r a d i c a l s o r i t a l i s t s . I n t h e absence of King Hussein abroad t h e d been s k i l l f u l l y handled by Crown Prince Hassan. Calm r e s t o r e d and t h e army had not been c a l l e d i n . The it o f Prime M i n i s t e r Zaid R i f a ' i had resigned. More disturbances were p o s s i b l e a s other a u s t e r i t y measures agreed w i t h the IMF were introduced. A programme of measures was l i k e l y t o J ^ T j u t t o t h e Board of the IMF i n June and t h e United Kingdom w ^ d ^ y e t o be prepared t o o f f e r Jordan seme h e l p i n t h a t pr

China Previous Reference: 0C(88) 40.2

Canada Previous Reference: 0C(89) 4.3

SECRETARY s a i d t h a t t h e r e were IHE FOREIGN AND i c demonstrations i n China, continuing l a r g e cbang on 15 A p r i l these had begun on Following t h e death Peking, spreading subsequently a f a i r l y good-natured Xian and Changsha. On 21/22 t o other r e g i o n a l c i t i there had been another A p r i l , the n i g h t before i n Tienanmen Square. I h e demonstration numbering ese demonstrations i n l e s s Embassy i n Peking were r e p o r t d been struck by t h e l a c k of dramatic terms than t h e media The s e v e n t i e t h i n t e r v e n t i o n s o f a r by m i l l it would be c e l e b r a t e d anniversary o f t h e 1919 democracy public u n r e s t . The on 4 May and could g i v e r i s e t o authoritative e d i t o r i a l People's D a i l y had r e c e n t l y issued warning a g a i n s t t h i s i n s e v e r e terms, I h e l a t e s t news overnight more s e r i o u s . I t was t h a t t h e demonstrations might be political was u n l i k e l y t h a t t h e students would obta^ continuing reforms they wanted by t h i s means, whatev prospects f o r t h e economic reform p:

ΊΗΕ SECRETARY OF STATE FOR DEFENCE s a i d that the Commissioner would be c a l l i n g on him l a t e r that mor him t h a t t h e Canadian Government had decided, f o r reasons, t o abandon i t s p l a n s t o acquire nuclear submarines. T h i s might w e l l be a prudent decision f o r notwithstanding t h e disappointment f o r B r i t i s h s a l e s pr The Cabinet Took note.

4. ΊΗΕ FOREIGN AND OCMMDNWEAIIH SECRETARY s a i d t h a t the main issues cons idered a t the meeting of the Foreign A f f a i r s Council on 24 A p r i l had been the Uruguay Round and r e l a t i o n s w i t h E a s t e r n Europe. On the f i r s t , t h e r e had been a general welcome f o r the r e s u l t s achieved by the Trade Negotiations Committee. A Portuguese bid, l i n k e d t o the prospective l i b e r a l i s a t i o n of t e x t i l e s , f o r a s p e c i a l r e s t r u c t u r i n g programme f o r the Portuguese industry, had been s a t i s f a c t o r i l y contained. On l a n d there had been general agreement t h a t greater f l e x i b i l i t y ould be shown i n the negotiations f o r a trade and co-operation it. Agreement had a l s o been reached t h a t negotiations on agreement w i t h Romania should be suspended and not u n t i l Romania had improved i t s human r i g h t s record.

Agriculture Council 17-22 A p r i l

THE MINISTER OF AGRICULTURE, FISHERIES AND POOD s a i d t h a t the outcome o f i ^ S ^ 5 V 2 day meeting of the A g r i c u l t u r e Council on proposals for p r i c e s f o r 1989/90 had been the Commi United Kingdom o b j e c t i v e s had been f u l l y met. satisfacto! ed had maintained the momentum of reform of The decisio; P o l i c y which would be e s s e n t i a l f o r the the Common Round. The expenditure f o r e c a s t f o r 1989 success of the the budget c e i l i n g s . T h i s r e f l e c t e d i n and 1990 was wel t i n the u n i t e d S t a t e s , but a l s o p a r t the e f f e c t s introduced following the February maintenance of the d been necessary t o r e s i s t 1988 European Counci pressures t o take the a v a i l a b i l i t y of resources to introduce a d d i t i o n a l pr The r e s u l t s achieved 011 so represented a s a t i s f a c t o : f o r United Kingdom farmers. I n p a r t i c u l a r there had t i e d devaluation of the green pound. T h i s was both ptory i n i t s e l f and represented a s i g n i f i c a n t the complete dismantling of monetary compensatory amoun 92. While i n recent years t h e r e had been monetary oarpensat its of as much a s 28-31 per cent, these had new been redu no more than 3 per cent had been abolished i n most commodities and i n seme c a altogether. One welcome e f f e c t of t h i s was t h a t i t reduced the scope f o r abuse on the border between Northern I r e l a n d and the of the agreement I r i s h Republic. A f u r t h e r s a t i s f a c t o r y f nsibility had been the reduction i n the l e v e l of mi very s n a i l l e v y . The agreement as a whole would have taken the estimated effect, on the r e t a i l p r i c e index, opportunity t o keep up the pressure f o r incidence of fraud against the Community i n c r e a s i n g evidence t h a t these i s s u e s were new s e r i o u s l y by other Member Countries and the Ccmmi f u r t h e r c o n t r o l measures were t o be brought forward. I n a b r i e f d i s c u s s i o n i t was noted t h a t the agriculture" p r o v i s i o n i n the 1989 budget had been seme £1.2 b i l l i o n the g u i d e l i n e agreed i n February 1988. The i n t e r n a l Ccmmii 10

proposals f o r a g r i c u l t u r a l spending i n 1990 i n the 1990 Preliminary D r a f t Budget were f o r spending of seme £2.9 b i l l i o n below the agreed g u i d e l i n e . These savings r e f l e c t e d t o a s u b s t a n t i a l extent the e f f e c t i v e operation of the s t a b i l i s e r s and the watertight conpartments imposed by the budget d i s c i p l i n e arrangements which prevented savings i n one commodity area being spent on other commodity regimes. Against t h i s background, the German a u t h o r i t i e s had i n c r e a s i n g l y been having recourse t o s p e c i a l s e t a s i d e arrangements and VAT £‫׳״‬$^funds. FRIME MINISTER, summing up the discussion, s a i d t h a t the 2t congratulated the M i n i s t e r of Agriculture, F i s h e r i e s and the very s a t i s f a c t o r y outcome t o the annual a g r i c u l t u r a l pi'^r'fixing discussions.

Visit to Washington by Minister of Agriculture, Fisheries and Food

AGRICULTURE, FISHERIES AND POOD s a i d t h a t he had THE MINI η on 23-25 A p r i l f o r d i s c u s s i o n s with the v i s i t e d W; t u r e and other members of the United S t a t e s Secretary of general t h e atmosphere of the d i s c u s s i o n s Administrati p a s t v i s i t s . On the Uruguay Round, the had been b e t t e d } outcome i n the Trade Negotiations view taken was although there would be much Committee had d e t a i l e d implementation of the broad hard work ahead t o r e s s i o n was that e a r l i e r US agreements reached decoupling, making support enthusiasm f o r the t o production, had decreased, a v a i l a b l e on a b a s i s i n t r a n s l a t i n g a l l elements of However, there was much of t a r i f f s . T h i s approach a g r i c u l t u r a l support i n t o i n p r a c t i c e , not l e a s t of presented a number of t i t could pose major d e f i n i t i o n , and he had made d be represented a s problems f o r the Ocmnunity s ! c u l t u r a l P o l i c y . As s t r i k i n g a t the h e a r t o f the ing taken was t o complete regards the Farm B i l l , the approa a b a s i s which seemed more new l e g i s l a t i o n a s soon a s p o s s i b l ing support programmes concerned with the maintenance of than p o t e n t i a l developments i n t h e Uruguay Round. I t had been apparent during h i s v i s i t t h a t e n v i r o n m e n t ^ a n d food s a f e t y i s s u e s had become more prominent over the/pas^ year. As regards food safety, i t appearedthat the United Srateg3ftrthorities had encountered a number of the same problems oq^c^^b^campaigns as

m

States had the United Kingdom. H i s meetings with t the Trade Representative, Mrs Carl a H i l l s , had in problem of o i l seeds might present more d i f f i c u T the short term, than t h a t of hormone treated beefY important, however, t h a t progress be made on both 1 were not t o have an unhelpful impact on the Uruguay H i l l s had a l s o explained t h a t she was under heavy p: the C a l i f o r n i a n Congressional Delegation to take u n i l a a c t i o n on canned f r u i t .

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!CONFIDENTIAL)

I

ΊΗΕ SECRETARY OF STATE FOR TOADE AND INDUSTY r e c a l l e d t h a t , following the r e s o l u t i o n o f problems i n t h i s area with France, t h e r e had been suggestions t h a t I t a l y would place obstacles i n the way o f imports o f Nissan c a r s manufactured i n the United Kingdom. He had pursued the matter w i t h the Commission. He had new been informed t h a t these reports had been put out t y the I t a l i a n a u t h o r i t i e s s o l e l y f o r i n t e r n a l consumption. No problems over imports t o I t a l y were i n f a c t foreseen.

Ocatunity. Competence

MINISTER s a i d t h a t she had r e c e n t l y had drawn t o her m i n d i c a t i o n s t h a t the Commission was attempting t o Community competence i n t o new areas. I n p a r t i c u l a r a docisfyent sponsored by the Commission had proposed the adoption o f a Framework D i r e c t i v e which would r e q u i r e Member S t a t e s t o develop publicly-funded c h i l d care s e r v i c e s f o r c h i l d r e n up t o the age o f ^ S h . I t was important t h a t colleagues should be f u l l y a l e r r t < v Commission proposals t o extend the Community's competencesi^l>S^ s o c i a l area and bring them i n t o the open. noted t h a t constant v i g i l a n c e was required I n discussion e generally. I h e problem was in relation to ,dual Commissioners adopted an unhelpful exacerbated when' Papandreou i n r e l a t i o n t o both stance, a s had market i s s u e s , i h e European Court of s o c i a l s e c u r i t y and r e t the Treaty i n ways which J u s t i c e a l s o tended Instead o f working t o e s t a b l i s h extended Community ation, there were continuing a market w i t h t h e such areas a s s o c i a l s e c u r i t y , pressures f o r s t a n d a r d ! t i o n . Analogous problems arose company and labour market "‫׳‬1 Commission interpreted the i n r e l a t i o n t o f r o n t i e r s wh o r i t y t o dispense with S i n g l e European Act a s p r a v i n s of p l a n t and animal checks required, f o r example, e r , made a h e l p f u l h e a l t h . Commissioner B r i t t a n was suggested t h a t the speech on f r o n t i e r i s s u e s r e c e n t ! r , l o r d Cockfield, on the approach being taken by h i s pred wider evolution o f the Community, including a s i n g l e currency, was so patently extreme a s arguably t o be welcome on t h a t account. I t was noted t h a t the Sub-Ocmmitfc^^on European Questions o f the Defence and Oversea P o l i c y C ^ m i t t e e (OD(E)) had r e c e n t l y i n s t i t u t e d a monitoring arrangStotfSS^ t o i d e n t i f y p o t e n t i a l l y c o n t r o v e r s i a l developments i n Eu(pp§^^0cm1munity business. 1

THE PRIME MINISTER, summing up the d i s c u s s i o n , s a Cabinet needed t o be f u l l y a l e r t t o the catpe Foreign and Commonwealth Secretary should arrange f< a n a l y s i s o f departments' knowledge o f attempts by t h t o extend Community competence, notably i n the s o c i a l be considered i n i t i a l l y by OD(E) and then by a meeting

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f u l l Committee. Regular reports would be needed about such attempts and the Cabinet i t s e l f might need t o c o n s i d e r t h i s i s s u e from time t o time. The Cabinet Took note, with approved., o f t h e Prime M i n i s t e r ' s summing up o f t h e i r d i s c u s s i o n and i n v i t e d t h e Foreign and Commonwealth Secretary t o proceed accordingly.

Cabinet Offapjs. 27 A p r i l

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