Australia and Japan have agreed to begin a feasibility study on a free-trade agreement between the two countries. However, an agreement will be years away.
Australian Prime Minister John Howard raised the trade issue during his meetings with Japanese officials in Tokyo. After discussing the matter with Japan's trade minister, Mr. Howard then met with Prime Minister Junichiro Koizumi.
Mr. Koizumi agreed to a compromise: the two nations would not start free-trade talks, but rather conduct a feasibility study on the matter. The Japanese prime minister says he expects the study would take two years and after that Tokyo and Canberra would decide whether to pursue formal negotiations.
Mr. Howard arrived in Japan on Tuesday after concluding an agreement in Beijing to begin free-trade negotiations with China. He was eager to strike the same deal with Japan, which is Australia's largest export market.
In an interview with the Australian Broadcasting Corporation, Australian Trade Minister Mark Vaile acknowledged that such an agreement between Japan and his country would not come quickly or easily.
"At this point in the relationship, we should be embarking on a feasibility study into a possible FTA. That obviously takes some time," he said. "We all understand the sensitivity of agriculture here in Japan."
An Australia-Japan free trade agreement faces strong opposition here from the powerful agriculture lobby, which is a traditional supporter of Japan's political establishment.
Japan's heavily subsidized farm industry and restrictions on agricultural imports keep the country's food costs among the highest in the world. Australia, on the other hand, exports vast amounts of food, and its farmers also are politically powerful - so the agriculture issue may be a major sticking point in reaching a trade agreement.
Australia supplies half of Japan's beef imports and nearly one-quarter of its imported wheat.
Despite the concerns of Japanese farmers and livestock producers, there is some support in the Japanese government for a free-trade agreement, because it might help Tokyo secure a stable supply of such natural resources as iron ore and coal.