By Stanley White
TOKYO (Reuters) - The United States urged Japan on Monday to open its auto and insurance markets more to foreign companies as the two countries pursue bilateral talks linked to a broader free-trade agreement that covers two-fifths of the globe.
The United States hopes to make a proposal to Japan on its trade barriers in September, U.S. Trade Representative Michael Froman said, as part of a drive to reach a conclusion on the Trans-Pacific Partnership (TPP) free trade initiative by the end of the year.
Reports that Japan's government is willing to phase out tariffs on 85 percent of goods under negotiations for the TPP are a "good initial step", Froman said, suggesting there was still a gap between the trading partners.
"The foreign share of the Japanese auto market is about 6 percent," Froman told a news conference.
"The foreign share of the U.S. auto market is closer to 40 percent. I don't think there is any question that the U.S. market is quite open."
The U.S. government has long pushed for fewer tariffs on its cars and more access to Japan's insurance market but has met with little success.
U.S. markets are some of the most open in the world, Froman said, suggesting there was not much that the United States could offer in return to the access that it was seeking.
However, making it easier for foreign firms to do business in these two areas would increase Japan's productivity, contribute to its economic growth strategy and help secure progress in TPP negotiations, Froman said.
Officials from the 12 countries in TPP talks will meet in Brunei from Thursday, but vested interests make it difficult to agree on lowering tariffs for agricultural products or barriers to industries that countries want to protect.
Japan is under heavy pressure from farmers to resist cutting tariffs for products like rice.
There is also resistance in Vietnam and Malaysia, where state-linked enterprises and selective handouts of government contracts are entrenched and politically sensitive.
Froman, in Tokyo for talks with Japanese government officials, said it was natural for every country to have areas that they were sensitive about, but those areas should be dealt with in TPP negotiations.
The United States is spear heading the TPP initiative, which includes Australia, New Zealand, Mexico, Canada, Chile, Peru, Malaysia, Vietnam, Singapore, Japan and Brunei, as part of a shift to focus more on Asia.
China has said it is studying joining the TPP but it is not part of negotiations on the grouping.
(Editing by Robert Birsel)