Australia says Japan trade talks to cover all bases

CANBERRA, Dec 13 (Reuters) Australia today said that free trade talks with Japan would cover all areas, including politically-sensitive agricultural tariffs and uranium sales.

Prime Minister John Howard, confirming the start of formal talks next year, said nothing would be off the table during negotiations, which would have no deadline for completion given sensitivities on both sides.

''We recognise that (agriculture) is very sensitive to the Japanese,'' Howard told reporters in Sydney, adding a successful deal could inject up to billion anstralion dollar extra into Australia's economy.

Howard said he and his Japanese counterpart Shinzo Abe would exchange visits in 2007 to help progress negotiations both sides admitted would be difficult.

Japan is Australia's largest trading partner with two-way goods and services receipts of almost 54 billion anstralion dollar in 2005-06. Australia is Japan's third-largest source of agricultural products after the United States and China.

Agreement to open talks was made in a phone conversation with Abe, Howard said. The negotiations will coincide with the 50th anniversary of trade ties between the two countries following World War Two.

Japan has been cautious about entering free trade pacts with major farm exporters like Australia because of concern about the impact on its domestic industry.

Japanese protections for agricultural products include a 777 per cent tariff on rice and 251 per cent on wheat, as well as a 360 percent barrier to butter. Australian agricultural exports include beef and dairy products and totalled A billion in 2005-06.

While Japan has been keen to protect its ageing farmers, it has also been keen not to be left behind by a global wave of bilateral and regional free trade deals.

With Japan keen to shore up energy supplies in competition with fast-growing China, Howard said Australia could sell uranium to Japan to fuel the nuclear power industry.

''Japan has quite an interest in nuclear power and we are a country that has a lot of uranium,'' Howard said.

Australia has already concluded free trade deals with the United States, Thailand and Singapore, and is negotiating deals with China, Malaysia and the 10-nation ASEAN bloc.

REUTERS DKS PM0528