Japan and Australia will announce a free trade deal Monday, reports said, in a rare opening of Japan's protected markets, even as talks to ink a huge Asia-Pacific agreement run into trouble.
Japanese Prime Minister Shinzo Abe and visiting Australian Prime Minister Tony Abbott were to announce a basic agreement on the long-awaited trade pact -- as well as possible defence cooperation -- at a press briefing Monday evening, the top-selling Yomiuri Shimbun and other major Japanese media said.
A Japanese foreign ministry official declined to comment.
The reported deal comes with Canberra also set to sign a free trade pact with Seoul on Tuesday after four years of negotiations. Abbott will head to China after South Korea as part of an East Asian tour.
Under Abe, Tokyo has entered into talks on the massive Trans-Pacific Partnership, a proposed free-trade deal that would encompass 12 nations including the United States and Japan.
But there are major sticking points among various nations, including the opening of protected domestic markets such as agriculture and automobiles.
Japan has long been accused of protecting its domestic industries -- including the politically powerful agricultural sector -- with high trade barriers, while many of its own exports, including vehicles and electronics, enjoy big sales overseas.
The US has expressed frustration with Japan over its stance on keeping certain sectors out of the Trans-Pacific Partnership, as talks continue.
Tokyo is also in separate free-trade negotiations with the European Union.
On Sunday, Abbott said he was "optimistic" about the negotiations with Japan, but added that they had been "difficult".
If a trade deal is reached, Australia would become the first major exporter of farm produce, including beef, to conclude a free trade accord with Japan, the Kyodo news agency said, with a deal expected to give Australian exports a significant competitive edge over US rivals.
-- 'This will be the Asian century' -
Under the reported deal, Australia would drop its five percent duty on small and mid-sized Japanese cars while Tokyo is ready to lower its tariff on Australian beef, currently sitting at 38.5 percent.
Abe and his Australian counterpart are also expected to talk about cooperation in security, including joint development of defence equipment, after Japan last week loosened a self-imposed ban on weapons exports to boost Tokyo's global role in a move which unnerved neighbouring China.
The Australian premier was set to attend a national security council meeting in Tokyo on Monday afternoon, a first for a foreign leader.
"Peace and understanding, progress and prosperity in our part of the world benefits everyone," Abbott said Monday at the launch of a programme aimed at supporting Australian students studying in Asia.
"Besides, this will be the Asian century. I think that's true: The better Asia is, the better the world will be," he added.
Regional tensions have soared as China and Japan lock horns over the ownership of a string of islands in the East China Sea, while Beijing is also embroiled in a dispute with several nations over territory in the South China Sea, which it claims almost in its entirety.
An unpredictable North Korea looms over the regional power balance.
Abbott's visit came as Tokyo said last week it would cancel its annual Antarctic whaling hunt for the first time in more than 25 years to abide by a UN court ruling that the scheme was a commercial activity disguised as science.
Australia, backed by New Zealand, hauled Japan before the International Court of Justice in 2010 in a bid to end the annual Southern Ocean hunt -- a thorny diplomatic spat that threatened to damage the trade talks.
The deal with South Korea, meanwhile, calls for Canberra and Seoul to remove almost all tariffs on traded goods within 10 years of the agreement going into effect.
Australia will abolish a five-percent import tariff on most South Korean-made cars while a five percent tariff on other South Korean exports such as TVs, refrigerators and machinery would also be eliminated immediately.
Tariffs will also go on resources, energy and manufactured goods, while the deal will open the door to new opportunities for Australian firms in South Korea's education and telecommunications markets.