Japan's ruling coalition and the main opposition party are reported to have agreed on a law that would allow the government the ability to restrict cash remittances from Japan to North Korea. The remittances comprise a major source of the cash-strapped communist country's hard currency.
Remittances from some 200,000 pro-Pyongyang ethnic Koreans in Japan - estimated at several hundred million dollars a year - are considered among North Korea's main sources of hard currency.
Until now, the isolated communist state has benefited from a Japanese government policy that effectively turns a blind eye to such transactions, even though the two countries have no diplomatic relations.
But on Saturday, Japanese news media reported that parliament is expected to approve a bill revising the Foreign Exchange and Foreign Trade Law at the legislative session beginning Monday, allowing the government to ban such remittances. The law would also allow the government to suspend trade with the North Korea.
North Korea has said in the past it would take "strong counteraction" if Japan were to limit remittances.
The reports, quoting parliamentary sources, say Japan's ruling Liberal Democratic Party has secured opposition agreement to push the revision through - reflecting a broad political consensus on two key issues overshadowing the Japanese-North Korean relationship: how to deal with North Korea's suspected nuclear weapons program, and the country's abduction of Japanese citizens during the Cold War.
Current Japanese law allows the nation to impose economic sanctions only as part of international peace efforts, under United Nations auspices. The reports say that under the proposed legislation, Japan could impose unilateral sanctions to satisfy its own national security considerations.
Prime Minister Junichiro Koizumi has said his government has no immediate plans for sanctions against the North, but has publicly urged that the legal groundwork be laid to prepare for a changing situation. And opposition leader Naoto Kan has argued before parliament in favor of a law to curb the remittances.
The government has also announced plans to install a U.S.-designed missile defense system aimed at protecting the country against North Korean ballistic missiles.
Japan is a party to six-nation talks aimed at halting Pyongyang's nuclear-arms development. Diplomats are currently trying to arrange a second round of those talks, perhaps as early as next month.