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Japan and Australia are expected to begin negotiations on a free-trade agreement early next year, according to diplomatic sources.

The two sides agreed, in vice-ministerial talks Tuesday in Canberra, to draw up a joint report by the end of the year that is expected to recommend starting talks on a bilateral trade pact.

A formal agreement on starting the talks is likely be reached when Prime Minister Shinzo Abe and his Australian counterpart, John Howard, meet at the East Asian summit scheduled for December in the Philippines.

If the talks go ahead, they will be Japan’s first free-trade negotiations with a major agricultural exporter. Canberra would like to see lower tariffs on farm products, but Japan’s long-protected agricultural interests are likely to fight such a move.

Australia has important things to offer in return: coal, iron ore and other resources that Japan badly needs. An FTA would also help Japan secure additional energy supplies.

Japan is Australia’s largest trading partner, with two-way trade totaling some 4 trillion yen in 2005, according to the Finance Ministry.

Japan ships mainly cars and machinery to Australia. Exporters are lobbying to have Canberra scrap tariffs on such products, which are subject to duties of 5 percent to 10 percent.

The talks thus far have been conducted through a joint study group set up in April last year. The two sides have been most at odds over the lifting of restrictions on trade in farm products. In Tuesday’s discussions, however, Australia appeared to give ground on the issue.

Japan has decided to begin FTA talks because Abe wants to strengthen diplomatic and economic ties with Australia, the sources added.

Doha talks restart?

GENEVA (Kyodo) Farm minister Toshikatsu Matsuoka, and World Trade Organization Director General Pascal Lamy agreed to try to restart the stalled Doha Round of global trade talks and successfully conclude them, Matsuoka said Tuesday.

Matsuoka, the agriculture, forestry and fisheries minister, is visiting Europe to exchange views with Lamy on the negotiations. He also plans to visit the headquarters of the European Union in Brussels to discuss the issue.

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