New Zealand Prime Minister John Key on Thursday warned Japan risked missing out on trade opportunities in the Asia-Pacific region if it continued to restrict access to its market.
New Zealand's relationship with Japan was one of its "strongest and warmest," but "no relationship, no matter how strong, can afford to stand still,"" Key said in a published speech to the Japan New Zealand Business Council Conference in Auckland.
"Twenty years ago, our two-way trade with Japan was around 10 times greater than our two-way trade with China. Last year it was half our trade with China," Key said.
While part of the change was due to China's impressive growth, it was equally a story about trade access and openness as New Zealand exports to China had trebled since the two countries signed a free trade agreement in 2008.
"Within the Asia-Pacific region, we also have long-standing free trade agreements with Australia and Singapore, and more recent FTAs with Thailand, ASEAN (Association of Southeast Asian Nations), Malaysia and Hong Kong," said Key.
"We are in negotiations with South Korea, Russia, India, and with a number of countries, including the United States, through the Trans-Pacific Partnership (TPP)."
Key said New Zealand was a small country that, on its own, was not a major market for Japan.
"But my point is that there is a raft of activity on free trade around the Asia-Pacific region that Japan risks missing out on," he said.
"That's obviously a matter for Japan itself to determine, bearing in mind its own domestic issues. But for New Zealand's part, we would welcome the opportunity to expand our trade relationship with Japan."
Key said that on his recent visits to Japan, the business community had expressed its support for a free trade agreement with New Zealand, either bilaterally or as part of the TPP.
The main hurdle to an FTA with Japan was undoubtedly sensitivity around agriculture, but he was confident that with good faith and flexibility the issues of concern to Japan could be properly discussed and resolved.
The New Zealand and Japanese economies and the two agricultural sectors were highly complementary.
"We don't produce rice. Nor do we export significant quantities of sugar, barley, wheat or pork, which are sensitive agricultural products for Japan," said Key.
"New Zealand products such as grass-fed beef fill a specific need in Japan, where most beef is grain-fed, rather than competing directly with Japanese producers.
"New Zealand and Japan are also in different hemispheres, meaning New Zealand producers can supply Japanese consumers during the off-season in Japan."
Closer cooperation between agricultural industries could benefit Japanese farmers, who were facing pressures to improve its efficiency and looking to build their own high-quality exports to affluent consumers across the region.
"So I consider that New Zealand's agriculture is an opportunity for Japan, rather than a threat," he said.
New Zealand supported Japan's interest in joining the TPP negotiations when it was ready to do so, and was able to commit to the same high level of ambition shared by the existing 11 TPP participants.
"New Zealand, the Asia-Pacific region and the world all need a strong Japan. It is the world's third-largest economy highly skilled, technologically sophisticated and capital intensive," he said.
This year was the 60th anniversary of diplomatic relations between New Zealand and Japan.
Japan was New Zealand's fourth-largest trading partner and fourth-largest source of foreign investment.
"At a political level, New Zealand and Japan share democratic values and have a joint commitment to peace and prosperity in the Asia-Pacific region," said Key.