Prime Minister Junichiro Koizumi and his visiting Thai counterpart, Thaksin Shinawatra, agreed Thursday on a basic accord to lower mutual trade barriers that left key decisions on high tariffs on Japanese cars and Thai rice unresolved.
But Foreign Ministry officials stressed that the strategic importance of a free-trade agreement with Japan's biggest trade and diplomatic partner among the Association of Southeast Asian Nations outweighs individual issues, and said the FTA will smooth the way for concluding a separate FTA with ASEAN itself.
Under the pact, which will be formally signed next year, Bangkok will lower its 80 percent duty on finished Japanese luxury cars and other large cars to 60 percent by 2009, but will keep the tariff intact on all other cars. The two sides agreed to renew negotiations on the matter later.