Japanese Prime Minister Shinzo Abe said Wednesday he has agreed with U.S. President Donald Trump that the two countries will start negotiations for a bilateral trade agreement, while avoiding higher U.S. tariffs on Japanese auto exports that Tokyo feared would have a devastating impact on the economy.

The bilateral deal reached during a meeting in New York between the two leaders signals a concession by Tokyo, which has favored a multilateral approach to address trade issues.

Trump has taken issue with the huge U.S. trade deficit with Japan and called for "reciprocal" trade. Tokyo has been trying to fend off the U.S. push for negotiating a free trade agreement.

"The agreement today will create a win-win economic relationship through the promotion of trade," Abe told a press conference after the meeting.

Autos and agricultural products are seen by the two countries as sensitive items. Abe said he confirmed with Trump that Japan will be exempted from the potential imposition of tariffs on imports of cars and auto parts as long as trade negotiations are under way.

According to a joint statement, Japan and the United States "respect positions of the other government." Tokyo's stance is that it will not make bigger concessions than those already agreed to under existing free trade agreements such as the Trans-Pacific Partnership, a multilateral framework from which the United States has withdrawn.

(U.S. Trade Representative Robert Lighthizer (far R) and Japan's economic revitalization minister Toshimitsu Motegi (far L) hold talks in New York) [Pool photo]

"We're starting trade talks with Japan. They were not willing, for years, to talk trade," Trump said at a separate press conference. "And now, they're willing to talk trade. And I'm sure we'll make a very good deal."

Although the envisaged deal is seen as a de-facto free trade agreement, Japanese government officials stress that it will be different as FTAs are more "comprehensive."

The summit came amid growing trade friction among the world's major powers, notably the United States and China. Wednesday's agreement to start talks is seen as good news for Trump in the run-up to the midterm congressional elections in November.

Upcoming negotiations are expected to cover a wide range of goods and services, but it remains unclear exactly when they will start negotiations due to congressional procedures.

Japan has been seeking to expand the coalition of countries promoting free trade through such frameworks as the TPP and the regional Comprehensive Economic Partnership in the Asia-Pacific region.

In July, Japan signed a free trade pact with the European Union to reject the rise of protectionism.

The Abe-Trump summit was also aimed at enhancing coordination over the complete denuclearization of the Korean Peninsula.

Following up on his unprecedented June summit with Kim Jong Un in Singapore, Trump has said he wants to meet the North's leader again in the near future.

Japan and the United States confirmed the need for bilateral cooperation on Wednesday as Kim pledged during the inter-Korean summit last week to permanently dismantle his country's major nuclear complex if the United States takes unspecified reciprocal actions.

Speaking at the press conference to wrap up his visit to New York, Abe reiterated that he is ready to meet with Kim face to face and put an end to years of mutual distrust.

"Should any summit be held, it should be something that will contribute to resolving the abduction issue."

Abe has made it a priority to settle the issue of the abductions by North Korea of Japanese nationals in the 1970s and 1980s.

South Korean President Moon Jae In told Abe on Tuesday that Kim had said he was ready to engage in dialogue with Japan and improve ties at an appropriate time, according to South Korea's presidential office.