Japan and Mexico have concluded a free-trade agreement, marking the first time Tokyo has made a comprehensive pact involving agricultural products. The finalization of the pact came after both countries made last-minute concessions.

Following 16 months of tough negotiations, a basic agreement was reached earlier in the week, but differences on a number of items held up the final version. It took a video conference late Friday among Japanese and Mexican cabinet members to finalize the agreement.

Japan, at the last minute, agreed to lower tariffs on such items as pork and orange juice. That will help Mexican farmers better compete against the United States and Brazil. At present, almost all Mexico's pork goes to Japan.

Mexico, in return, consented to removing tariffs on Japanese steel over a 10-year period.

The deal is expected to be formally signed in June and to go into effect next January.

Agriculture Minister Yoshiyuki Kamei brushed aside questions, from Japanese reporters, concerning possible harm to the country's agriculture sector.

Mr. Kamei says it is important to think about how to protect national interests, and he feels that this agreement does just that.

Economists say Japan badly wanted the deal because it is estimated that the country is losing nearly $4 billion annually without a trade agreement with Mexico.

The deal is seen as greatly benefiting Japanese automakers, who will see 50 percent tariffs eliminated on their cars going into Mexico.

Mexico says it expects the deal to result in more than $12 billion of Japanese direct investment during the initial 10 years, and will lead to an annual growth in Mexican exports to Japan of more than 10 percent.

Japan signed its first free trade agreement two years ago, with Singapore. But the Mexican treaty marks the first time Japan has made such a comprehensive deal covering agricultural products, a sector that Tokyo, bowing to the political clout of farmers - has zealously protected in the past.

Japan has recently initiated free trade negotiations with South Korea, Malaysia, Thailand, and the Philippines, and is said to be considering launching negotiations with Indonesia and Taiwan. Japan also hopes to conclude, by 2012, a free trade agreement with the Association of Southeast Asian Nations.