Japan has proposed setting low-tariff quotas for imports of butter and skim milk powder under terms being thrashed out for the Trans-Pacific Partnership, negotiation sources said Thursday.

The proposal was made in response to strong calls from other members of the 12-nation TPP initiative, including major dairy exporter New Zealand, for the expansion of dairy imports.

Dairy is one of Japan's five agricultural sector that are seen as off-limits.

Both the ruling Liberal Democratic Party and Diet committees on agriculture have adopted resolutions calling for the protection of key farm products.

Boosting dairy imports under the TPP may help stem Japan's prolonged shortage of butter, but Tokyo will carefully negotiate the details of the plan to avoid possible adverse effects on the domestic dairy industry, the sources added.

Currently, the government controls imports of butter and other dairy goods to prevent farmers from being affected by an influx of cheaper foreign products. It levies a 35 percent tariff on butter.

The sources said Japan could even make the envisioned quotas tariff-free, but it is unclear if New Zealand and others will accept the current proposals.

In the TPP negotiations, Canada has been reluctant to open up its dairy market to foreign competition, bogging down its talks with New Zealand as well as the United States, which want to expand exports of dairy products.

The United States, Australia, Brunei, Chile, New Zealand, Peru, Singapore and Vietnam launched negotiations for the TPP in 2010, with Malaysia, Mexico, Canada and Japan joining the dialogue later.

The 12 countries that cover around 40 percent of global gross domestic product are set to hold a ministerial meeting from July 28 in Hawaii, seeking to reach a broad agreement.