U.S. staring contest with Japan stretches out Pacific trade pact

By Krista Hughes WASHINGTON (Reuters) - A standoff between the United States and Japan is holding up talks on a sweeping Pacific free trade pact and a lack of authority to push an eventual deal through the U.S. Congress without amendment may be undercutting Washington's hand. After weekend talks in Singapore, including two separate sessions between Japan and the United States, Japanese Economics Minister Akira Amari said "considerable gaps" remained with the United States on bread-and-butter issues like farm tariffs. Other officials at the Trans-Pacific Partnership (TPP) talks, which aim to create a free trade zone spanning 12 countries and nearly 40 percent of the global economy, noted the impasse between the two biggest economies in the bloc. "What happens between Japan and the U.S. is pretty key because they are the big players," Australian Trade Minister Andrew Robb told CNBC television, estimating that countries were about 80 percent done on market access issues, which include the tariffs and quotas causing much of the U.S.-Japan tension. There is talk in trade circles that Japan might leave the talks if it will not drop barriers to imports of farm products such as beef and rice. But the Asian power's entry to the TPP last year was a game changer for many participants given its high-income population and relatively low import penetration. "Many tried and failed in the past to negotiate a bilateral deal with Japan, so in a sense they are riding the coattails of the United States to get into the Japanese market," said Peterson Institute for International Economics trade analyst Jeffrey Schott. For his part, Japanese Prime Minister Shinzo Abe needs the trade pact to drive through reforms to kick-start stagnant growth, including deregulation and increased competition. A Peterson study showed the TPP would boost Japan's economy by 2.2 percent by 2025.