U.S., Japan discuss trade, North Korea in White House talks

By Leika Kihara

WASHINGTON (Reuters) - Top officials from the United States and Japan, holding negotiations on economic ties between the two nations, on Monday emphasized the importance of cooperation between them at a time when North Korea was building up its nuclear capabilities.

The talks come a month before U.S. President Donald Trump stops in Tokyo during his first trip to Asia, which is expected to focus on how to further isolate North Korea over its aggressive nuclear programme.

"The United States of America will continue to bring the full range of American power to bear on the regime in Pyongyang as we hope to achieve through diplomatic and economic means a peaceable solution and the achievement of the long-sought goal of a nuclear-free Korean peninsula," Vice President Mike Pence said at the start of the talks.

Japan's Deputy Prime Minister Taro Aso, noting the two nations' relationship was underpinned by economic ties, said: "The threat of North Korea has never been so imminent, which is why the importance of the U.S.-Japan alliance for peace in the Asia-Pacific has increased."

The talks are shaping up to be a test of whether the close U.S.-Japan relationship can withstand Trump's "America First" trade policies.

The Trump administration has said it would like to negotiate a two-way trade deal to give U.S. goods more access to Japanese markets.

Tokyo has shown little appetite to meet U.S. calls to open up its highly protected agricultural markets ahead of a general election on Sunday in which Prime Minister Shinzo Abe's ruling coalition is seeking to win votes from farmers and dairy producers.

Pence said the White House sees the talks, the first round of which was in April, as having the potential to boost jobs and prosperity in both countries.

Aso hopes to diffuse calls for a bilateral trade deal by cooperating on infrastructure and energy, for fear a two-way trade agreement would expose it to stronger U.S. pressure to open up its politically sensitive farm product markets.

Analysts cited uncertainty on whether the two sides can narrow their differences.

"Japan has no plan to open talks for a bilateral free trade agreement (FTA) anytime soon," said a Japanese government official with knowledge of the negotiations.

"We may not see much progress as Washington seems to have a lot on their plate," with talks on renewing the North American Free Trade Agreement (NAFTA) also under way, the official said on condition of anonymity as he was not authorised to speak publicly.

Japan will propose changes to safeguard mechanisms on U.S. frozen beef imports, though it is uncertain this would appease U.S. complaints, sources have told Reuters.

The two sides may also discuss U.S. requests to loosen safety and environment requirements for Japan's auto market, though Tokyo is against making any compromise.

(Additional reporting by David Lawder and Roberta Rampton; Editing by Chizu Nomiyama)