Britain Threatens to Oust Japan Firms in Trade Dispute

Britain pressured Japan Thursday to resolve a trade dispute, targeting at least 58 Japanese firms for possible expulsion within weeks and threatening to deny business licenses to applicants from that country.

The Cabinet of Prime Minister Margaret Thatcher, at its regular meeting, agreed to expedite a provision of the Financial Services Act that empowers the government to oust the Japanese firms, Thatcher’s office said.

The provision would enable the Department of Trade and Industry to revoke licenses of Japanese banks and insurance companies and reject petitions from new applicants, on grounds their home country hasn’t allowed equal access to British firms.

Brokerages and similar types of Japanese firms would be affected at this point, the department said. Fifty-eight Japanese financial firms operate in London’s financial district. The department said the provision would take effect in 21 days, or sooner.

Thatcher’s aides would not comment on the prospects of the government enforcing the provision against the Japanese firms.

The provision had been due to take effect this summer, but the Cabinet moved to accelerate the process because of a dispute involving Cable and Wireless PLC, a British firm seeking to enter Japan’s telecommunications market.

The Cabinet’s action might be aimed at increasing pressure on Japan before a visit to Tokyo by the British minister of corporate and consumer affairs, Michael Howard. He leaves Saturday.

On Wednesday, Trade and Industry Secretary Paul Channon summoned Japan’s ambassador to London, Toshio Yamazaki, and expressed Britain’s “deep concern” about persistent imbalances of trade, London news reports said.

The developments in the Cable and Wireless dispute indicated a fundamental attitude change by the Thatcher administration in its relations with Japan. Until recently, her government advocated free trade and criticized retaliation.

Thatcher was particularly incensed by Japanese Prime Minister Yasuhiro Nakasone’s failure to respond quickly to a letter she had written him March 4 about Cable and Wireless.

Cable and Wireless holds a 20% stake in International Digital Communications, which has been competing with an all-Japanese consortium for the right to provide an alternative international communications link to Japan.

The deal is still under negotiation.