Tokyo is also hoping the deal will deepen ties with Mongolia as it tries to resolve the case of Japanese citizens abducted during the Cold War by North Korean agents, leading dailies the Asahi and Yomiuri reported.
Mongolia is one of the few countries that has formal diplomatic relations with Pyongyang.
Japanese Prime Minister Shinzo Abe and Mongolian President Tsakhiagiin Elbegdorj are due to hold talks on Tuesday evening, with the trade agreement likely to be announced during the summit, according to the reports.
Terms of the planned deal include Mongolia scrapping five percent of tariffs on Japanese car imports, while Japan would trim its levies on Mongolian beef, the Asahi said.
The agreement will also likely include a so-called investor-state dispute settlement (ISDS) clause, which allows firms to pursue compensation claims if they think government policy has damaged their investment, it added.
Japan-Mongolia trade stood at 31.20 billion yen (US$307 million) last year.
Resource-rich Mongolia, wedged between Russia and China, has seen big economic growth in recent years as global firms eye its vast natural resources.
In May, Pyongyang agreed to reinvestigate the kidnapping of Japanese citizens during the 1970s and 1980s, in what appeared to be a significant breakthrough on an issue that has long hampered Tokyo's relations with the isolated country. They have no formal diplomatic ties.
Japan earlier this month lifted some of its own sanctions on North Korea following the apparent deal.
North Korean agents kidnapped dozens — and possibly hundreds — of Japanese citizens to help train spies in language and customs. The actual number and fate of some of the abducted remains a point of contention, with Tokyo saying Pyongyang had not come clean on the issue.
Source:AFP
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