Japan poll could freeze Australia free trade deal

CANBERRA, Aug 27 - A likely win by the Democratic Party of Japan in weekend elections could end Australian hopes of a comprehensive free trade pact with its second-biggest trade partner and bring a re-think in Tokyo on growing security ties.

Australia-Japan free trade negotiations, dragging now for 28 months, could fall victim to a DPJ promise that no trade deal threatening Japanese farmers will be allowed, said Jenny Corbett, a senior Japan analyst at the Australian National University.

"The DPJ, as far as we can tell at the moment, is in a difficult position, as it has had to position itself to appeal to farmers," Corbett told Reuters.

"That is going to make the agriculture element of an FTA (free trade agreement) with Australia even more difficult, and this has already been pretty difficult," she said.

The ruling Liberal Democratic Party of Prime Minister Taro Aso, which has spent only 11 months out of power in 54 years, is widely expected to lose this weekend's election, with opinion surveys pointing to a comprehensive DPJ victory.

The DPJ, headed by Yukio Hatoyama, could capture between 280 and 320 seats in the 480-member House of Representatives.

Progress on the FTA talks has been glacial with Australia insisting on better access for agricultural produce including wheat, sugar, dairy products and beef, while the DPJ has promised protection for politically influential farm electorates.

Australia Prime Minister Kevin Rudd's centre-left government aims to complete talks started by his conservative predecessor John Howard, who also championed a free trade pact with China. That is now under a cloud as well amid a diplomatic row with Beijing.

Corbett, who heads the Australia-Japan Research Centre at the Crawford School of Economics and Government, said the DPJ was in a strange ideological position forced on it by the clout of the country's farmers.

"The issue is whether the Australia FTA will crash because of agriculture," she said. "The only hope would be if other elements (like services) can be restored to a more central place."

Japan was Australia's top export destination in 2008, with two-way trade worth $58 billion. Canberra also maintained a $25 billion trade surplus on the back of coal and iron ore exports.

China, currently in a war of words with Australia over the arrest of an Australian mining executive and a visa given by Canberra to an exiled Uighur leader, overtook Japan as the country's biggest trade partner in April.

Corbett said DPJ moves to differentiate itself from Aso's ruling LDP on Japan's close U.S. alliance could have implications for Australia's nascent security relationship with Tokyo, now marked only by differences over Japanese whaling.

"What view they will take on security, I don't know," she said.

Australia and Japan signed in 2007 a security pact strengthening military co-operation, striking Japan's first defence agreement with a country other than the United States.