Japan and Australia reach a deal on free trade

Japan and Australia have agreed on a free-trade deal after overcoming differences on cars and agriculture, in a rare opening of Japan's protected markets, even as talks to ink a huge Asia-Pacific agreement run into trouble.

The deal was announced by Japanese Prime Minister Shinzo Abe and visiting Australian Prime Minister Tony Abbott in Tokyo last night.

The deal calls for Japan to gradually phase out its nearly 40 per cent tariffs on Australian exports of beef. In turn, Australia is to end its tariffs on Japanese-made vehicles.

"I hope that thanks to this agreement that Australia can be pivotal in assuring Japan's energy security, its resource security and its food security," Abbott said.

Among the Australian business leaders visiting Japan with Abbott were finance, gambling and mining industry executives.