Visiting Thai Prime Minister Thaksin Shinawatra came up with a new approach Tuesday to get his country and Japan on the road toward a free-trade agreement.

In a meeting with trade minister Takeo Hiranuma, Thaksin proposed dividing goods and services into three categories based on their political sensitivity and to start any free-trade talks by dealing first with the least sensitive category.

That group would consist of goods and services that could immediately be included in a free-trade pact.

Hiranuma applauded the Thai prime minister's proposal, calling it a good idea.

An official from the Economy, Trade and Industry Ministry said he personally expects consultations to be carried out as part of recently launched studies between Japan and the 10-member Association of Southeast Asian Nations.

In September, Japan and ASEAN set up an expert study group with an eye to striking a regional FTA.

Since Thailand exports far more agricultural produce than other ASEAN member countries, it would be more viable for Japan to seek an FTA with the whole of ASEAN than bilaterally with Thailand, the official said.

Earlier in the day, Hiranuma indicated readiness to study the issue but was cautious at the same time, apparently in view of likely resistance from politically strong domestic farmers who do not want Japan's agricultural market to be opened to foreign competition, particularly to rice imports.

Thailand is the world's top rice exporter.

Hiranuma told reporters the probable study should be carried out on the condition that Japan places its primary focus on a free-trade regime under the World Trade Organization and regards bilateral and regional FTAs as complementary to it.

The WTO requires developed countries to eliminate tariffs on almost all imports when concluding a regional FTA.

Japan is poised to sign its first-ever FTA by the yearend with Singapore, which has limited agricultural exports. Ongoing studies with Mexico and South Korea, however, face an uphill battle because of their substantial farm exports.

Hiranuma, meanwhile, offered to send energy experts to Thailand as part of Tokyo's efforts to build oil stockpiles throughout Southeast Asia to prepare for the region's expanded consumption and risks involving transport from the Middle East, the official said.

He also confirmed with Thaksin that the Thai administration, inaugurated in January, will continue to promote foreign investment, as Japanese businesses operating in the Southeast Asian nation initially feared a nationalistic policy shift, the official said.

Meanwhile, Prime Minister Junichiro Koizumi and Thaksin have agreed to step up bilateral economic cooperation and jointly help less-developed countries in Southeast Asia.

During their talks at the Prime Minister's Official Residence on Monday night, the two leaders reached an agreement to establish a new economic partnership under which Japan will strengthen cooperation on developing Thailand's agricultural sector, promote investment, and develop information technology infrastructure.

The document, signed by Foreign Minister Makiko Tanaka and her counterpart Surakiat Sathirathai after the meeting, replaces a policy paper on bilateral economic cooperation that covered the period between 1997 and 2000. The new agreement is valid through 2005.

Under the agreement, the two countries will also cooperate in developing areas along the Mekong River to help Vietnam, Laos, Cambodia, Myanmar and other less-developed countries in the Association of Southeast Asian Nations, a Foreign Ministry official said.