Japan, fresh from pact with Australia, says US trade talks difficult

Australian Prime Minister Tony Abbott (left) shakes hands with his Japanese counterpart Shinzo Abe prior to a National Security Council meeting at the latter's official residence in Tokyo on April 7, 2014. -- FILE PHOTO: AFP 
Australian Prime Minister Tony Abbott (left) shakes hands with his Japanese counterpart Shinzo Abe prior to a National Security Council meeting at the latter's official residence in Tokyo on April 7, 2014. -- FILE PHOTO: AFP 

TOKYO (Reuters) - Japan, fresh from clinching a trade deal with Australia, said on Tuesday it hoped for a similar result in negotiations with the United States and also for a broad regional trade pact, but said the talks would be difficult.

Japan and the United States are pushing for a two-way trade deal, a crucial part of a broad US-led Trans-Pacific Partnership (TPP), before US President Barack Obama arrives in Japan this month.

US Trade Representative Michael Froman will hold talks with Japanese Economy Minister Akira Amari on Wednesday, although a senior U.S. lawmaker said there was little chance of a breakthrough as long as the White House did not have fast-track authority to guarantee a quick passage through Congress.

The TPP, a 12-nation grouping that would stretch from Asia to Latin America, is a centerpiece of Mr Obama's push to expand the US presence in Asia.

Japanese Prime Minister Shinzo Abe has touted the multilateral framework as a key part of his growth strategy, but the outlook for a Japan-US deal by the summit is cloudy as both sides accuse each other of inflexibility.

Australian Prime Minister Tony Abbott and Mr Abe confirmed a basic trade agreement on Monday, overcoming sticking points on beef and autos that had threatened to stymie a deal, and agreed to work toward signing it as soon as possible.

"We hope that the fact that we could reach an agreement on the (Australian) deal will have a positive impact on the TPP and other regional economic agreements," Japanese Chief Cabinet Secretary Yoshihide Suga told a news conference.

Mr Suga said the United States and Japan were making every effort to resolve outstanding bilateral issues, which Froman has blamed for holding up agreement on the wider TPP talks.

"The situation is very difficult, but we hope that a positive role can be taken towards a broad agreement on this."

The United States wants Japan to open its rice, beef and pork, dairy and sugar sectors - politically powerful sectors that Mr Abe has vowed to defend. Japan wants a timetable on US promises to drop tariffs of 2.5 per cent on imports of passenger cars and 25 per cent on light trucks.

Mr Froman said on arrival in Japan that the TPP - which aims to scrap all tariffs - aimed for a higher standard than the Japan-Australia deal, particularly on beef, where Japan will reduce but not scrap tariffs.

"Clearly we are looking for a level of ambition in TPP that is significantly higher than that," he told reporters.

Some in Tokyo hope the Australian compromise will give them ammunition against US demands to eliminate tariffs on politically sensitive farm products.

But a senior Japanese government official cautioned that an agreement with the United States before Mr Obama's visit was unlikely, though not impossible.

"The US is not flexible. It keeps a dogmatic position on Japanese tariffs," said the official, who declined to be identified because of the sensitivity of the talks.

"That may change. It's doable. What we are telling them is a well-considered option: improved market access through tariff reduction short of elimination."

Some trade experts say there is little chance of Japan or other TPP countries putting up their best offers while the White House does not have trade promotion authority (TPA), allowing trade deals to go before Congress for a yes-or-no vote.

"I don't think he will have a successful conclusion to the TPP... without TPA," said Senator Orrin Hatch, the top Republican on the Senate Finance Committee and co-sponsor of a TPA Bill that is currently in limbo after opposition from senior Democrats.

Sen Hatch called on Mr Obama to throw his support behind the Bill, saying the administration's attitude had been tepid at best.

"No complex, economically significant trade agreement has ever been negotiated by any administration and approved by Congress without Trade Promotion Authority," he said at the Centre for Strategic and International Studies.

A USTR spokesman rejected Sen Hatch's criticism and pointed to public comments in support of the TPA from the President, Vice-President and other senior administration officials.

Many Democrats are worried about a backlash over jobs at November elections if trade deals open US markets to more competition. Mr Froman has said a good TPP deal will convince critics of the need to pass TPA.