Japan, a major beneficiary of free trade, should take greater initiative in creating global trade rules and reconciling domestic regulations with international ones to ensure freer corporate activity, according to a government white paper released Tuesday.

The 1998 white paper on international trade also calls on Japan to play a greater role in helping neighboring Asian nations overcome their immediate and long-term economic difficulties.

The 50th annual report on the nation's trade policy was presented to the Cabinet by Mitsuo Horiuchi, minister for international trade and industry.

Acknowledging that Japan has become inextricably tied to the global economy, the report sets forth the creation of global rules, reconciliation of existing regulations and cooperation with Asia as the three pillars of the nation's trade policy.

The sheer size of Japan's economy, which accounts for roughly 20 percent of the global economy, has secured Japan a significant presence in the global market, the report says. However, it points out that Japan has yet to become a "true forerunner" in terms of quality, warning that the nation may be left behind in the ongoing move toward globalization.

Ensuring the smooth flow of trade and investment is indispensable for Japan's sustainable economic development, the white paper says.

Thus, Japan must play an active role in creating global rules for various international economic activities, especially those concerning such new areas as investment, service trade, intellectual property rights protection, competition policies and electronic commerce.

In forming the nation's trade policy, it says, the government must recognize the world as an integrated market and cooperate with other nations to harmonize existing rules. Specifically, the government needs to constantly review and adjust its national regulations in light of global rules.

At the same time, the report calls for promoting mutual recognition of standards with major trade partners and harmonizing competition policies.

The report also says Japan should help to further integrate two emerging economic giants -- China and Russia -- into the global economy by promoting their early entry into the World Trade Organization.

In the long term, the white paper says, Japan should help nurture supporting industries, develop human resources, and promote research and development activities in order to reinforce Asian economies' fundamental strength.