TOKYO -- The Japanese government later this month is expected to adopt policy guidelines for 2007 calling for economic partnership agreements that include free-trade accords with the United States and European Union.

Hiroko Ota, the minister for economic and fiscal policy, on Tuesday presented the draft proposals to a meeting of the Council on Economic and Fiscal Policy, the government's key policymaking panel chaired by Prime Minister Shinzo Abe.

The draft stipulates that the Japanese government will "consider as future tasks" economic partnership agreements with the U.S. and the EU. The draft is to be formally approved at a cabinet meeting on June 19. This wording on the EPA issue is apparently the result of a compromise between Japanese businesses and the ruling coalition.

Four private-sector members of the 11-member panel demanded that the key economic policy guidelines stipulate the need to launch as soon as possible joint studies with the U.S. and the EU on concluding EPAs. Such studies are usually conducted before formal negotiations are launched. But Abe's ruling Liberal Democratic Party objected, for fear of losing farmers' votes in a crucial election for the upper house in July.

The four private-sector members of the panel include Fujio Mitarai, chairman of the Japan Business Federation, the country's biggest business lobby group. Mitarai is also chairman of Canon Inc.

Japanese and U.S. business groups have urged their governments to launch free trade negotiations as soon as possible. But both Tokyo and Washington remain reluctant to open talks, at least at an early date. For Japan, the liberalization of agricultural trade, especially in rice, the most politically sensitive item, is considered the biggest stumbling block to trade talks with major farm exporters, including the United States.

After South Korea reached an free-trade pact Washington in early April and then opened negotiations with the EU in early May, pressure has further grown from Japanese businesses for the Abe government to move toward trade talks with the U.S. and the EU. Japanese exporters, especially of electronics goods, fear losing sales in the U.S. and European markets to their South Korean rivals, who will enjoy significantly lower or zero import tariffs in the two huge markets.