Japan and the 10-member Association of Southeast Asian Nations will hold their highest-level talks ever in Myanmar next week to discuss Prime Minister Junichiro Koizumi’s recent proposal to forge a “comprehensive economic partnership.”

But the talks are expected to expose sharp differences between Japan and ASEAN over the details of the proposal, especially over whether a possible free-trade agreement, envisioned as a main pillar of the new partnership, should include agricultural products, a politically sensitive sector for Japan.

ASEAN wants to include agricultural products in any FTA with Japan, while Japan remains reluctant to do so in the face of strong pressure from domestic farm lobbies and their supporters within the ruling Liberal Democratic Party.

According to government sources, Japanese and ASEAN deputy ministerial-level officials in charge of economic affairs will meet in Yangon on April 12 as part of the 18th Japan-ASEAN Forum. Their political counterparts will also meet in Yangon a day before or after the economic meeting.

The Japanese delegation to the economic part of the Japan-ASEAN Forum will be led by Shotaro Oshima, a deputy foreign minister for economic affairs, the sources said.

The sources said that the upcoming economic meeting will mark the full-scale start of efforts to work out the specific details of the proposed partnership, before he and his ASEAN counterparts meet again in Cambodia at the end of this year.

It remains unclear, however, who will play a central role in building consensus within the Japanese government over the details of any new partnership, including a possible FTA.

The Japan-ASEAN Forum directly reports to Japanese and ASEAN foreign ministers, who also meet annually during the ASEAN foreign ministers’ meeting in the summer.

The Ministry of Economy, Trade and Industry has also held an annual autumn meeting with ASEAN economic ministers every year since 1992. The participants at this meeting, called AEM-METI, like those at the Japanese and ASEAN foreign ministers’ meeting, all directly report to their top leaders.

Apparently concerned by the growing economic influence of China in Asia, Koizumi proposed a “comprehensive economic partnership” between Japan and ASEAN when he visited five ASEAN countries in January.

Koizumi called on the ASEAN leaders to forge such a partnership through closer ties not only in the traditional areas of trade and investment but also in newer areas like information technology and science.

The Japanese proposal came only two months after top Chinese and ASEAN leaders agreed at a meeting in Brunei in early November to conclude an FTA by 2010.

The economic power of China — already the world’s seventh-largest economy in terms of gross domestic product — is widely expected to grow even further since its admission into the World Trade Organization in December.

Japan is the world’s only major industrialized economy that does not have an FTA with any trading partners, even though it signed its first FTA, with Singapore, during Koizumi’s ASEAN trip in January. The Japan-Singapore FTA is expected to be put into force this summer after being ratified by the Diet.

ASEAN consists of Thailand, Indonesia, the Philippines, Singapore, Malaysia, Brunei, Vietnam, Laos, Cambodia and Myanmar.

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