June 26, 2015 / 4:28 AM / in 2 years

Japan, U.S. can reach agreement for July pan-Pacific trade deal: Japan official

People work near cargo containers loaded from trucks at a port in Tokyo, June 17, 2015.Yuya Shino

TOKYO (Reuters) - Japan and the United States are likely to resolve outstanding bilateral issues so that a 12-nation Trans-Pacific Partnership (TPP) deal can be struck at a multilateral ministerial meeting expected in July, a senior Japanese official said on Friday.

A deal between the United States and Japan, the world's largest and third-largest economies, is vital to clinching the multilateral TPP pact, which would cover 40 percent of the world economy. The deal is a key part of U.S. President Barack Obama's strategic rebalance to Asia in the face of a rising China.

The politically touchy matters of access to Japan's market for farm products including rice and the U.S. market for auto parts are among remaining bilateral issues, the official said told Reuters.

"It is not anticipated that these remaining issues will be stumbling blocks for a U.S.-Japan agreement," the official said.

"We are confident we will be able to resolve them in time for concluding TPP negotiations overall."

After a six-week Congressional battle, the U.S. Senate voted 60 to 38 on Wednesday to grant Obama "fast-track" power to negotiate trade deals and speed them through Congress.

Japan and some other countries had wanted fast-track to be approved before making final offers on the trade deal. The Japanese official declined to give details of the negotiations.

Intellectual property protection including for newly-developed drugs ranks high among the issues to be resolved to clinch the multilateral TPP deal, which would harmonize rules and standards and lower trade barriers among the 12 developed and emerging nations.

"If not conducted satisfactorily, it could very well be a reason for the U.S. Congress to reject TPP. So it is a prerequisite for a TPP agreement to include high standard protection for new drugs," the Japanese official said.

But the official nonetheless sounded an optimistic note.

"I don't think any remaining issues cannot be resolved if there is sufficient political attention and input required to solve these in time for the ministerial meeting that we expect to be held before the end of July," he said.

Prime Minister Shinzo Abe has touted TPP as an engine of reforms needed to drive growth. Japanese officials also hope the pan-Pacific deal will help anchor ally Washington in Asia and create a rule-based regime that would eventually draw in China.

If the TPP is agreed in late July or early August, the deal could be up for a final vote in U.S. Congress in the first half of December. Other countries also have to seek lawmakers' approval.

Reporting by Linda Sieg; Editing by Chris Gallagher and Michael Perry

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