Japan and Thailand have reached a basic agreement on a free trade accord, with some remaining technical issues to be ironed out in the near future, the Japanese Foreign Ministry told The Associated Press (AP).


Japan’s prime minister Junichiro Koizumi and his Thai counterpart, Thaksin Shinawatra, approved the basic contents of the agreement drawn up last month by officials from the two nations, the ministry reportedly said in a statement.


Under the agreement, Thailand will reduce tariffs on steel products imported from Japan over the next 8-10 years, in order to give time to Thai steel manufacturers to prepare for the competition, AP said.


The report added that Thailand also has agreed to reduce import tariffs on cars with engines of 3,000 cubic centimetres or more to 60% from the current 80% by 2009.


Tariffs on imports of automobile parts deemed sensitive by the Thai authorities will be eliminated by 2013, while tariffs on imports of other parts will be eliminated by 2011, the Associated Press said, citing the ministry statement.


AP added that the pact aims to reduce tariffs on $35 billion worth of trade between the two countries. Japan is Thailand’s single biggest trading partner, and Thailand is a leading exporter of rice, fruit, shrimp and other food products.


The news agency noted that the deal is the fifth for Japan, which has signed agreements with Singapore and Mexico and reached basic agreements with Malaysia and the Philippines.


The pact is expected to be signed “in the earlier part of 2006,” the ministry statement said, according to the Associated Press.


AP added that Thailand, which doesn’t have its own car companies, serves as a major parts production and assembly base for the auto companies, including Toyota, Honda and General Motors.


In recent years it has become the global production base for Japanese-designed pickup trucks.