Obama urges Japan to take 'bold steps' in huge trade deal

TOKYO - US President Barack Obama urged Japan Thursday to take "bold steps" to seal a Pacific-wide trade deal after Washington failed to wrest key concessions from Tokyo.

The Trans-Pacific Partnership (TPP), a vast agreement that would cover about 40 per cent of the global economy, is a key plank in Obama's bid for a renewed focus on Asia.

It is also seen as crucial for Japanese Prime Minister Shinzo Abe's pledge to shake up his country's long-lumbering economy.

But the ambitious 12-nation deal has stalled as Tokyo and Washington lock horns over key details, including Japanese tariffs on agricultural imports and US access to its ally's major auto market.

Speculation that a deal would be announced during Obama's Asia tour, which officially kicked off on Thursday in Tokyo, were dashed at a joint press briefing following talks between the leaders of the world's number one and three economies.

"Now is the time for bold steps," Obama told reporters.

"I think it's fair to say that there are certain sectors of the Japanese economy - the agriculture sector, the auto sector - in which market access has been restricted historically." He added that those stumbling blocks "at some point have to be resolved...(and) I believe that point is now".

The deal is a crucial part of Abe's promises to reform Japan's economy and stoke long-tepid growth, the US leader said.

"TPP is consistent with those reforms and, as Prime Minister Abe said, there is a strategic importance to this as what's happening now is shaping the economic environment for the fastest growing region in the world - not just for this year or next year, but potentially for this decade and the next decade," Obama said.

- Unresolved issues -

The two leaders told their trade delegations to press on with talks to "settle the remaining issues and work for an early conclusion" of the agreement, Abe said.

Japanese economy minister Akira Amari said negotiations were still moving forward, after holding the latest round of meetings with US Trade Representative Michael Froman in Tokyo on Thursday.

"I think progress has been made, but there are still gaps," he told reporters.

"We will continue negotiations. But the issues that remain unresolved include some big ones," Amari added, without elaborating.

Japan was hoping that a free trade agreement with Canberra this month, which will see tariffs on Australian beef slashed, would help bounce Washington into compromises, but US diplomats appear to have stood firm.

Washington and many of the other parties to the talks - including Chile, Mexico, Canada and several Asian countries - say Japan's unwillingness to open its lucrative agricultural market is a deal-breaker.

Critics have long complained that sky-high Japanese tariffs - on rice they are nearly 800 per cent - and non-tariff barriers, like overly-strict safety requirements, are naked protectionism.

Negotiators missed the end-of-2013 deadline they had set themselves - a target that always looked ambitious, but became much more so when Japan got involved in the talks during the year. No new end-date has been set.