Japan, U.S. report progress on trade talks, though Tokyo stands tough on rice

TOKYO (Reuters) - Japan and the United States reported progress in top-level trade talks on Sunday that could pave the way for a broader trans-Pacific trade deal, although Tokyo cautioned that a bilateral accord was unlikely in time for a summit next week.

Japan's Economy Minister Akira Amari and U.S. Trade Representative Michael Froman both said they had made good progress in the first of two days of cabinet-level discussions.

"We exchanged opinions about areas where Japan and the U.S. will cooperate in dealing with others" in the multilateral talks, Amari told reporters. "We confirmed progress made at working-level meetings with regard to remaining issues."

Access to Japan's farm market and the U.S. car market remain obstacles to a bilateral deal between the two nations, vital to the success of a long-delayed Trans-Pacific Partnership (TPP) pact. The world's biggest and third-biggest economies account for some 80 percent of the economic output of the 12-member TPP.

The ministers will meet from 9.30 a.m. on Monday (8.30 p.m. EDT on Sunday) to discuss remaining issues and "will earnestly hold discussions tomorrow about each specific item", Amari said.

Before the talks, Amari said Japan would not accept a U.S. demand to boost minimum access for its rice imports, while pressing Washington to further open the U.S. car-parts market.

He reiterated that he did not expect a deal before a summit between President Barack Obama and Prime Minister Shinzo Abe in Washington on April 28, but nonetheless hoped to make progress.

"Negotiations can't work if one side makes no concessions, but there are various domestic restrictions," Amari told public broadcaster NHK. "Rice, in particular, is produced across Japan, so we are carefully negotiating while feeling a domestic sense of crisis. I can promise it won't result in anything shocking."

Japan is prepared to allow an import quota for U.S. rice of 50,000 tonnes a year, just a quarter of the U.S. demand, the Nikkei newspaper reported on Saturday.

"We will not swallow the U.S. demand or close to it," Amari said, adding that a breakthrough could be made in talks on bilateral car trade.

Japan has sought immediate abolition of a 2.5 percent tariff on U.S. imports of auto parts, but Washington, under pressure from the politically powerful auto industry, wants to maintain auto-related tariffs as long as possible, the Nikkei reported.

Prospects for the bilateral deal improved on Thursday, when senior U.S. lawmakers agreed on the wording of a bill to give Congress a yes-or-no vote on TPP but not the power to alter a deal. However, passage of the "fast track" bill, which Japan says is essential, remains far from assured.

Washington and Tokyo see strategic value to a broad TPP deal as a counterweight to rising China, which has not joined the group.

(Editing by Clarence Fernandez, William Mallard and Crispian Balmer)