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Japanese Prime Minister Shinzo Abe (L) and Australian Prime Minister Tony Abbott look on after signing the Japan-Australia Economic Partnership Agreement and Agreement on the Transfer of Defence Equipment and Technology, in the Mural Hall at Parliament House in Canberra, July 8, 2014. REUTERS/Stefan Postles


By Jane Wardell and Tim Kelly

CANBERRA/TOKYO (Reuters) - Japanese Prime Minister Shinzo Abe and Australian counterpart Tony Abbott on Tuesday signed an economic partnership pact as well as an agreement on military equipment and technology transfers, a week after Abe loosened curbs on Japan's military.

Earlier Abe told Australia's parliament that the two nations were launching a "special relationship" of cooperation on areas such as defence after putting aside any lingering enmity from World War Two.

Abe, warily eying China's rapid military buildup and more assertive claims to islands held by Japan in the East China Sea, has been courting governments from Canberra to Southeast Asia in recent months. China is Australia's largest trading partner.

"The door for dialogue is always open from the Japanese side so I do sincerely hope that the Chinese side also take the same posture," Abe told a press conference after signing the Japan-Australian Economic Partnership Agreement.

"China along with Japan and Australia should play a greater role for peace and prosperity in the Asia Pacific region," he said.

The military deal "will make the first cut engraving the special relationship in our future", Abe earlier told a joint parliamentary session, the first such speech by a Japanese leader.

Mirroring a partnership concluded with Britain a year ago, it will establish a framework for industrial cooperation that could pave the way for a deal on building a fleet of stealth submarines for Australia.

Abe has been forging a more assertive defence and security posture in his year-and-a-half in office.

In April, he eased a four-decade ban on military exports, which could allow Japan to ship submarine components or even completed vessels to Australia.

A week ago, Abe's cabinet reinterpreted the pacifist constitution to allow Japan's military to defend friendly nations under attack.

"As a nation that longs for permanent peace in the world, and as a country whose economy is among the biggest, Japan is now determined to do more to enhance peace in the region and peace in the world," said Abe.


Abbott hailed the Japanese leader's pledge to build a more robust military. "For decades now Japan has been an exemplary international citizen, so Australia welcomes Japan's recent decision to be a more capable strategic partner in our region," he told parliament before Abe spoke.

Australia is looking for partners to build a fleet of 4,000 ton-class quiet-running diesel-electric subs to help extend its maritime surveillance deep into the Indian Ocean. Their presence could also help Japan keep better tabs on Chinese activity.

The United States, which is also closely allied with Australia, has also welcomed Abe's shift, saying it would make the U.S.-Japan alliance more effective.

Abe has sent his defence minister, Itsunori Onodera, to Washington to discuss the changes.

China, which says Japan has failed to atone for its wartime aggression and is seeking to whitewash history, has been sharply critical of Abe's moves.

Speaking at an event on Monday to commemorate the 77th anniversary of a skirmish that sparked war with Japan, Chinese President Xi Jinping condemned Japan's wartime atrocities and criticised those who "who ignore reality, move against the tide of history".

(Additional reporting by Swati Pandey in SYDNEY; Editing by William Mallard, Paul Tait and Jeremy Laurence)

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