Koizumi visit set to speed up Australia-Japan deal

By GREG ANSLEY

CANBERRA - Australia and Japan appear likely to move further towards a free-trade agreement when Japanese Prime Minister Junichiro Koizumi visits Canberra this month, before heading to New Zealand.

Australia and New Zealand both hope for eventual deals with Tokyo, and have been encouraged by Koizumi's advocacy of an East Asian trade pact to include both countries by 2010.

The greatest hurdle has been agriculture, but Australian Trade Minister Mark Vaile indicated after meetings in Tokyo that Canberra may be willing to find another, initial path skirting the most difficult issues.

"Japan's trade policy is clearly moving to embrace trade and economic agreements in the region, and the Japanese Government recognises the importance of Australia and the potential for enhancing our trading relationship," he said.

Vaile said Japan's political brick wall on protection for its farmers was sensitive but not unassailable, and although set aside in early discussions, agriculture would need to be part of any final free trade agreement.

He said agriculture was already on the multilateral agenda through the new World Trade Organisation round.

"This provides a very good opportunity to be undertaking this type of exercise, in pursuing this type of agreement with our major trading partner [Japan], when we can deal with sensitive issues in parallel with what is going on in the WTO."

In its latest statement of trade policy Canberra confirmed a new emphasis on bilateral free trade deals as a back-up to WTO negotiations.

An agreement was close to being settled with Singapore, high-level efforts were being made to negotiate another with the US, and discussions had started with Thailand.

Although tied closely to New Zealand through CER, and negotiating a trade co-operation deal linking CER with the Asian Free Trade Agreement, established by the 10 members of the Association of South East Asian Nations, Canberra is pursuing separate bilateral paths.

Canberra is now giving greater emphasis to Japan because of Koizumi's visit and free trade advocacy, and concerns that Australia - and New Zealand - could be pushed aside in talks between Asean and Tokyo.

The inclusion of both countries in earlier Southeast Asian talks was vetoed by Malaysia, and Australia fears similar problems at a summit in November to discuss Tokyo's proposals for a trade agreement initially embracing Asean, Japan, China, Hong Kong, Taiwan and South Korea.

Canberra now wants to accelerate talks with Tokyo, probably aiming at a two-stage agreement as proposed by the Australia-Japan Business Cooperation Committee to defer the thorny problems of agriculture.

In Tokyo, a similar business-sponsored report has recommended a comprehensive trade and economic framework with Australia.

Vaile said trade agreements of the kind sought with Japan usually took at least two years to negotiate.