CANBERRA, May 1: Australia and Japan have taken the first steps towards negotiating a free trade agreement while acknowledging agriculture remains the key stumbling block, their leaders announced here on Wednesday.

Agreement to launch negotiations on a trade pact emerged from talks between Australian Prime Minister John Howard and Japanese Prime Minister Junichiro Koizumi, on his first official visit to Australia.

Koizumi admitted there would be difficulties, highlighting agriculture as the obvious area of difference, but told a news conference held jointly with Howard: “I believe these are not insurmountable problems.”

He also stressed through an interpreter that as a strong relationship was in place, discussions would not be stalled.

The two leaders met for 90 minutes, focusing on trade, regional security and Japan’s bid for permanent membership of the UN Security Council which Howard said Australia had agreed to support.

But the major objective as far as Australia was concerned was to bolster a relationship with its biggest trading partner, which both have acknowledged had turned into “a stale marriage” in recent years.

Koizumi is on a three-day visit in which he was also due to address a dinner of the Asia Society in Sydney later Wednesday. He leaves for New Zealand on the next leg of his regional tour on Thursday.

“I believe we shall be seeing expanding economic cooperation between our two countries,” Koizumi said.

Australia, aware it would have to overcome the objections of Japan’s powerful farm lobby in dismantling huge tariff barriers to agricultural imports, has insisted agriculture be part of tries saw a free trade agreement as desirable, adding: “It will not be a quickly achieved goal, but it is a goal worth working towards.”

Both leaders believed the two countries had a lot in common and should aim for a closer relationship, he said and hinted possibility of a three-way security talks between Japan, Australia and the United States, details of which would have to be worked out. “But it is a concept that we are positive about,” he added.

“As far as Japan is concerned we believe that the global warming issue is one of deep concern,” Koizumi said.

Howard said Japan and Australia understood they had differences on the issue while sharing the common objective of reducing greenhouse gas emissions.

SYDNEY: Japanese Prime Minister Junichiro Koizumi vowed on Wednesday to push through necessary reforms to restore his country to the economic health vital for the wellbeing of East Asia and the world.

He also told a dinner here that he and Australian Prime Minister John Howard had agreed to build a new “creative partnership” to enhance exchanges on political and security issues, strengthen economic ties and cooperate across a broad range of areas.

“We must consider what type of economic partnership we should create to respond to the new international economic realities, particularly in East Asia, while maintaining the basic structure of our complementary economic relationship,” he said.

Koizumi, making his first official visit to Australia as prime minister, told the Asia Society that recovery of the Japanese economy, which accounts for 60 per cent of Asian gross domestic product, would have a big impact on Australia.

“Looking over history, one can see that nations decline without new visions and without the reforms to bring them about,” he said. “I do not intend to let that happen to Japan.

He congratulated Australia on its current stroed to the tough economic and regulatory reforms it undertook previously.

“Japan must do the same,” he added. “Japan must sacrifice what it is for what it can become.”

“Since my appointment as Prime Minister last April, I have accelerated my country’s reform as a matter of the highestpriority.—AFP