After decades of being trampled upon in successive trade wars with much more devious competitors, the UK is at last showing signs of having mastered the necessary finesse to play less scrupulous rivals at their own game. It was the French who demonstrated how to retaliate against Japanese import embargoes – nothing so crude and counter-productive as a contra ban on Japanese goods coming into France, simply a harmless little rule that all video recorders imported into France must go through Customs at Poitiers. To stop the things clogging up the docks at more accessible ports, don’t you know. The UK is faced with what could turn out to be its last opportunity to stand up to Japanese bullying in the case of the Cable & Wireless consortium bidding for the licence on offer to create a rival international telecommunications service to that of Kokusai Denshin Denwa. The facts are that the enabling legislation permits foreign participation of up to 33%, that the aim of the legislation was to establish genuine competition to KDD, that there are only two consortia bidding, and that the other one consists entirely of companies with no experience of running a telecommunications network – and plans to use KDD’s facilities anyway, thus providing no real competition. Putting those facts together, the case for the Cables-Itoh consortium is unanswerable – but the Japanese government is on the brink of shutting the door by demanding that the two consortia merge and Cables’ interest be cut to 3%. What is the British government to do? There has been some anxiety that the Japanese banks that have licences to operate in the City of London might have their licences revoked. That would be a terrible mistake, crippling London’s chances of remaining one of the three major financial centres of the world. But in Mrs Thatcher’s answers at Question Time in the Commons last Thursday, there are strong hints that the government may have acquired the necessary finesse to eschew the cudgel for the stiletto. Nomura Securities and Daiwa Securities both have their London banking licences, and are having a splendid time taking their percentage as Japanese institutions pour money into UK shares. And, not too surprisingly, two more of the biggest Japanese houses, Nikko and Yaimaichi are impatient to follow Nomura and Daiwa into London. The hints are that the government’s reaction will be yes, you can have your banking licences, all in good time… now when are you going to admit Cable & Wireless into the international telecommunications franchise?. The move that would be equivalent to granting Merrill Lynch and Kidder Peabody licences to operate in London while making Salomon Brothers and E F Hutton fester in the waiting room.