US-Japan Trade Deal Still Out Of Reach Before Obama-Abe Summit

By Reuters - WASHINGTON (Reuters) -- U.S. and Japanese trade negotiators have been unable to reach a deal to open Japan's markets more to imports ahead of President Barack Obama's visit, a senior U.S. administration official said Friday.

Negotiators are down to a relatively limited set of outstanding issues, but considerable differences separate the two sides, the official told reporters, speaking on condition of anonymity. Discussions will continue in the days and weeks ahead, but there is no particular deadline for concluding the talks, the official added.

Japan's economy minister, however, said the talks, seen as vital to a broader regional trade pact, are making progress and will resume Monday.

A U.S.-Japan agreement is critical to the U.S.-led Trans-Pacific Partnership, a 12-nation grouping that would stretch from Asia to Latin America. The TPP is central to Obama’s policy of expanding America's presence in Asia.

Japanese Prime Minister Shinzo Abe, for his part, has touted the TPP as a main element of his strategy to reform the world's third-largest economy and generate sustainable growth.

The two leaders are keen to show progress, if not clinch a deal, in time for their summit in Tokyo next Thursday.

"We still have big differences," Economy Minister Akira Amari told reporters in Washington after another round of talks with U.S. Trade Representative Michael Froman, according to Kyodo news agency.

But "the gaps are getting smaller," Amari was reported as saying before he left for Japan. Late on Thursday, he had said talks were at a "stalemate."

The USTR confirmed talks would resume between acting Deputy United States Trade Representative Wendy Cutler and Japanese Deputy Chief Negotiator Hiroshi Oe in Tokyo on Monday.

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

Japanese media has reported that the United States, which has been pushing Japan to scrap its tariffs, is willing to let Japan keep import levies on rice, wheat and sugar while it will create a mechanism to boost its imports of U.S. rice.

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Gaps remain over the size of cuts in tariffs on beef and over pork as well, the media said.

Japanese officials have been hoping that a two-way trade deal with Australia clinched this month, which allowed it to keep reduced tariffs on beef, would pressure the United States to make similar concessions.

Some experts say U.S. negotiators are at a disadvantage because the White House does not have authority to fast- track agreements through Congress, given opposition by senior Democrats to a bill laying the groundwork for a yes-or-no vote by lawmakers.