Reports: Japan, Australia Set to Ink Free Trade Deal

Japan and Australia are set to announce a free trade deal at a summit of the nations' leaders later Monday, reports said, after similar talks with the U.S. ran into trouble.

Japanese Prime Minister Shinzo Abe and visiting Australian Prime Minister Tony Abbott were to announce a basic agreement on the long-awaited trade pact which follows years of talks, major Japanese newspapers including the top-selling Yomiuri Shimbun reported.

Australia is also set to sign a separate free trade deal with South Korea when Abbott visits on Tuesday, South Korean President Park Geun-Hye said.

Abbott said he was "optimistic" about negotiations with Japan, but said they had been "difficult". The Japanese and Australian leaders were set to hold a press briefing in Tokyo on Monday evening.

Abbott arrived in Japan on Saturday on the first leg of an East Asian tour which will later take him to South Korea and China.

If a deal is reached, Australia would become the first major exporter of farm produce, including beef, to conclude a free-trade accord with Japan, the Kyodo news agency said, with a deal expected to give Australian exports a significant competitive edge over U.S. rivals.

Under Abe, Tokyo has agreed to enter into talks on the massive Trans-Pacific Partnership, a proposed free-trade deal that would encompass 12 nations including the United States and Japan.

But there are major sticking points among various nations, including the opening of protected domestic markets such as agriculture and automobiles.

Abbott's visit came as Tokyo said last week it would cancel its annual Antarctic whaling hunt for the first time in more than 25 years to abide by a U.N. court ruling that the scheme was a commercial activity disguised as science.

Australia, backed by New Zealand, hauled Japan before the International Court of Justice in 2010 in a bid to end the annual Southern Ocean hunt -- a thorny diplomatic spat that threatened to damage the trade talks.

Under the reported trade deal, Australia would drop its five percent duty on small and mid-sized Japanese cars while Tokyo is ready to lower its tariff on Australian beef, currently sitting at 38.5 percent.

The deal with South Korea, meanwhile, could see tariffs of up to 300 percent cut on key Australian agricultural exports such as beef, wheat, sugar and dairy, Abbott said last December.

Tariffs on natural resources, energy and manufactured goods are also set to be cut under the South Korean deal, which will open new markets for Australian education and telecommunication firms.

Japan has long been accused of protecting its domestic industries -- particularly the politically powerful agricultural sector -- with high trade barriers.

The U.S. has expressed frustration with Japan over its stance on keeping certain sectors out of the agreement as talks continue. Tokyo is also in separate free-trade talks with the European Union.