Japan, U.S. seek deals on auto parts, rice to secure trade pact

TOKYO (Bloomberg) -- Japanese and U.S. negotiators will seek to resolve the most contentious issues of auto parts and rice to help the two countries reach a trade pact, Japanese Economy Minister Akira Amari said.

Both sides need to soften their stance to reach an agreement, Amari said on public broadcaster NHK Sunday, before meeting U.S. Trade Representative Michael Froman for high-level talks on a trade deal that negotiators hope will lead to a broader Asia-Pacific pact involving 10 other nations.

An accord giving the U.S. and Japan access to each others' markets for products such as rice, pork and automobiles would only take effect if incorporated into the Trans-Pacific Partnership, a 12-nation negotiation that Japan joined in 2013.

Although all the governments must agree, the U.S. and Japan are by far the largest economies involved.

Car parts

For auto parts, Japan is demanding an immediate elimination of 2.5 percent tariffs on imports. Amari told NHK Sunday he expects Froman to concede on the duties as the product isn't politically sensitive for the U.S. and the American vehicle industry is dependent on parts supply from Japan.

Froman said Thursday that the broader group of countries is also nearing completion of the Asia-Pacific pact, which would cover about 40 percent of global trade.

The visit by Froman, President Barack Obama's top international trade adviser, to Japan April 19-20 comes ahead of a visit by Japanese Prime Minister Shinzo Abe to Washington on April 28.

In trade talks, ministers often finalize details of pacts, which are then formally approved by heads of state and government.

"I expect them to welcome progress in TPP talks at their summit meeting," Amari said. A bipartisan group of lawmakers in the U.S. Congress introduced on Thursday legislation that would grant the president fast-track negotiating authority.

It would let the president submit trade deals to Congress for an expedited vote without amendments.

For TPP members to complete the trade deal, Japan and U.S. must wrap up bilateral talks and U.S. Congress needs to pass the Trade-Promotion Authority bill, Amari said. "I expect the TPA bill to be passed by the end of May," he said.

Amari could not ignore a resolution by Japanese lawmakers, which says any trade deal should not undermine sustainability of rice production by local farmers, he said.

"We cannot accept all the U.S. requests on rice imports," Amari said, without elaborating on the demands. "We will negotiate cautiously for a deal that could be accepted by Japanese lawmakers."

Rice, wheat, barley, beef, pork, dairy products, sugar and starch crops are considered politically sensitive products that have to be protected, according to Hiroshi Oe, Japan's TPP ambassador.

Japanese farmers are a central constituency of the ruling Liberal Democratic Party.

Rice

The U.S. is demanding that Japan should increase imports of U.S. rice by 215,000 metric tons, of which 175,000 tons is for table rice and the remainder for food processing, said NHK.

Japan bought 360,000 tons from the U.S. last fiscal year, almost half the volume that the nation must import under a World Trade Organization deal. The country imposes a duty of 341 yen ($2.87) per kilogram on imports above the quota. Japan's rice consumption is declining as its population ages and shrinks.

Table rice consumption will fall 1 percent to 7.8 million tons for the year to June 30, the Agriculture Ministry forecasts, a decline of 10 percent from a decade earlier.

Consumption will continue to slide by about 80,000 tons annually for the foreseeable future, Vice Agriculture Minister Yoshitsugu Minagawa has said.

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