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Obama-Abe summit to aid trade talks, not seal deal: U.S. official

Japan's Economics Minister Akira Amari (C) speaks as he is surrounded by media after meetings with U.S. Trade Representative Michael Froman
Japan's Economics Minister Akira Amari (C) speaks as he is surrounded by media after meetings with U.S. Trade Representative Michael Froman

By Krista Hughes and Kaori Kaneko

WASHINGTON/TOKYO (Reuters) - Next week's meeting between U.S. President Barack Obama and Japanese Prime Minister Shinzo Abe is a good opportunity to give impetus to Pacific trade negotiations but will not seal a deal, a senior U.S. administration official said on Friday.

Talks between the United States and Japan seen as vital to a broader regional trade pact had narrowed to a few critical areas and will resume again on Monday, officials of both countries said, as negotiators hustle to prepare for Thursday's summit.

Breaking a U.S.-Japan deadlock over access to Japan's farm and auto markets is seen as key to finalising the Trans-Pacific Partnership (TPP), a 12-nation trade bloc that would stretch from Asia to Latin America.

The TPP is central to Obama's policy of expanding America's presence in Asia and 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.

When the leaders meet, they are likely to review progress so far on the trade talks and give some impetus to negotiators to move on to the next stage, the senior official said.

But they would not get into the details of tariffs on sensitive products such as beef, pork, rice and sugar, and would not conclude an agreement, he said, adding the talks were part of an ongoing effort to agree an ambitious, comprehensive deal.

U.S. Trade Representative Michael Froman and Japanese Economy Minister Akira Amari wound up a 20-hour negotiating session earlier on Friday with major gaps still on display.

"We still have big differences," Amari told reporters in Washington before he left for Tokyo, according to Kyodo news agency, although he said "the gaps are getting smaller."

The USTR said in a statement: "We continue to make progress, and we are now faced with a reasonable number of outstanding issues. These issues are important to both sides and considerable differences remain."

STICKING POINTS

Sticking points from the U.S. perspective revolve in equal measure around access to Japan's markets for agricultural products as well as peeling away at layers of Japanese regulations that serve to block automotive imports, 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. Momentum behind the talks need not stall because negotiators have not struck a deal ahead of Obama's visit to Japan, the official said.

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 ahead of elections in November.

TPP negotiators are due to reconvene in Vietnam in mid-May and trade ministers will meet at an Asia-Pacific Economic Cooperation event in China that same month.

The senior U.S. official said that even when a final agreement is reached, it would still take several months of work to translate that into a legal document which could be submitted to lawmakers for approval.

USTR confirmed bilateral talks would resume between U.S. Acting Deputy United States Trade Representative Wendy Cutler and Japanese Deputy Chief Negotiator Hiroshi Oe in Tokyo on Monday. Froman will travel to Tokyo with Obama later in the week.

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 have 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.

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.

(Aditional reporting and writing by Mark Felsenthal in Washington and Linda Sieg in Tokyo; Editing by Dominic Lau, Robert Birsel, Marguerita Choy, Jonathan Oatis and Eric Walsh)

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