* U.S. welcomes Japan interest but worried talks could bog down
* Japan's auto and insurance barriers concern many lawmakers
* Current TPP countries hope to finish talks this year
By Doug Palmer
WASHINGTON, March 15 (Reuters) - The United States on Friday cautiously welcomed Japan's request to join negotiations on a U.S.-led Pacific free trade pact, emphasizing that Tokyo must demonstrate it is able to tackle longstanding barriers to U.S. goods.
Japanese Prime Minister Shinzo Abe announced on Friday that Japan would formally seek to join talks on the Trans-Pacific Partnership (TPP), a proposed free trade pact between the United States and 10 other countries in the Asia-Pacific region.
Bringing the world's third largest economy into the negotiations would set the stage for a final agreement covering nearly 40 percent of world's economic output, making it an even more exciting prospect for U.S. exporters.
But there is also worry that the talks could bog them down if Tokyo is unwilling to deal with U.S. concerns over barriers to its auto, insurance and agricultural markets.
The Obama administration acknowledged those mixed feelings in a statement welcoming Abe's "important announcement."
Acting U.S. Trade Representative Demetrios Marantis said the United States had already been discussing "issues of concern with respect to the automotive and insurance sectors and other non-tariff measures" for over a year.
"While we continue to make progress in these consultations, important work remains to be done," Marantis said, adding that the administration would continue to consult with "Congress and stakeholders as we proceed."
Negotiators hope to conclude the pact by the end of year, and possibly as early as the annual meeting of leaders of the Asia Pacific Economic Cooperation forum meeting in October.
Japan's participation, if approved by the current TPP members, would make it more challenging to meet that timetable.
Even if those current members - the United States, Australia, New Zealand, Canada, Mexico, Peru, Singapore, Vietnam, Malaysia and Brunei - sign off on Japan joining the talks, the White House intends to give Congress 90 days notice before formally beginning talks with Japan.
Tokyo's interest creates anxiety for Detroit-based U.S. automakers, who fear losing more sales to Japanese imports.
Ford has been especially vocal in opposing Japan's entry into the talks until Tokyo demonstrably opens its market to more U.S. cars.
Representative Dave Camp, the chairman of the House of Representatives Ways and Means Committee, said he remained concerned that Japan had not "yet provided adequate assurances that it is fully committed to resolving the outstanding barriers to trade between the United States and Japan, especially as it relates to our auto exports and insurance."
The Michigan Republican also said he did not want Japan's interest in joining the talks to "unravel the significant progress we have already made in the TPP negotiations or delay the conclusion of TPP by the APEC Summit in October."
Senate Finance Committee Chairman Max Baucus, a Montana Democrat, said he welcomed Japan's interest and was hopeful the United States could build "on the progress we recently made when Japan began accepting more U.S. beef exports."
On Thursday, dozens of Democratic lawmakers expressed concern about Japan's entry in the negotiations in a letter to President Barack Obama.
Although Japan has no tariffs on U.S. autos, Ford and many U.S. lawmakers contend the country maintains a web of regulatory and other non-tariff barriers to keep out autos.
In their letter to Obama, the lawmakers urged the United States keep its 2.5 percent tariff on Japanese autos and 25 percent tariff on Japanese trucks if Japan enters the TPP.
Senator Orrin Hatch, the top Republican on the Finance Committee, said Japan's interest was "welcome news" but reinforced the need for the White House to work with Congress to pass "trade promotion authority."
That legislation would allow Obama to submit the deal to Congress for a vote without any amendments, thus assuring other TPP countries that U.S. lawmakers will not change the final pact.