Japan will aim to join U.S.-led trade pact: report

TOKYO Mon Nov 1, 2010 6:27am EDT

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TOKYO (Reuters) - Japan will aim to join a U.S.-led Asia-Pacific free trade pact while pursuing agriculture reform to overcome resistance from farmers, the Nikkei business daily reported on Monday.

Business lobbies, worried Japan is lagging behind rivals such as South Korea in free trade deals, want Prime Minister Naoto Kan to offer to take part in talks on the proposed Trans-Pacific Partnership (TPP) when he hosts the November 13-14 Asia-Pacific Cooperation (APEC) summit, which President Barack Obama will attend.

The government is set to announce basic guidelines for free trade deals this week ahead of the APEC summit. But many lawmakers in the ruling Democratic Party fear fallout from the TPP on Japan's long-protected and politically powerful farmers.

The Nikkei said the government would express its willingness to join negotiations for the TPP, which would eliminate tariffs on goods traded within the zone, in basic guidelines for Japan's free trade and economic partnership deals, for which it aims to secure cabinet approval on Friday.

Japan's top three business lobbies including the biggest, Nippon Keidanren, held a rally on Monday to urge the government to announce it will participate in talks on TPP rules at the APEC summit.

"I'm afraid Japan would trail others in improving the global business environment, lose the trust of the world and be excluded from global growth and prosperity if it put off the decision," Keidanren Chairman Hiromasa Yonekura told the meeting.

Business leaders were joined at the rally by a dozen lawmakers from the ruling and opposition parties including former trade minister Masayuki Naoshima.

"Opening up the country and strengthening economic ties with rapidly growing Asian and Pacific nations, and strengthening Japan's agriculture. These are two sides of the same coin," Naoshima said.

"There will be no growth or development of Japan without pursuing both goals."

To address concern among farmers, the government also aims to compile a medium-term plan for reforms in agriculture and other key areas, details of which will be fleshed out after the APEC meeting, the newspaper said.

The government is expected to offer measures aimed at bolstering the international competitiveness of Japan's agricultural sector such as support for exports. It also plans to expand income subsidies to farmers, Nikkei said.

Even if Japan shows interest in participating in the TPP negotiations, it needs approval to do so from other nations already involved in the talks, including the United States, Singapore and Australia.

Adding Japan, one of the world's largest economies, would greatly increase the potential market-opening gains of the proposed pact. But it could also complicate negotiations because of concerns by U.S. industry about lowering remaining tariffs on Japanese-made autos, and Tokyo's previous resistance to opening its rice and other farm markets.

(Reporting by Yoko Nishikawa and Kiyoshi Takenaka; Editing by Michael Watson)

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