The initiative would be to establish a pan-Asian FTA – involving India, Australia, China, Korea, Japan and New Zealand, along with the 10 members of the Association of Southeast Asian Nations. “The participation of democracies like India and Australia would enable the region to forge more open economic partnerships,” Ministry official Hideyasu Tamura said.
Recall that the ASEAN nations negotiate separately, meaning that this pan-Asian FTA will look more like a series of bilaterals than a MFN-friendly APEC deal.
Trade Diversion 
The Japanese have yet to conclude an FTA with ASEAN so this seems a bit of a stategem. Deep down, most ASEANs are afraid of free trade with Japan’s powerhouse manufacuturing companies and Japan cannot deal with free trade in food. ERGO, no real deal is possible in the near future, but that doesn’t stop politicians from posturing.
More recent posturing:
http://www.hindu.com/thehindu/holnus/003200608232122.htm
“Asean insists on concluding the Asean-Japan FTA talks and adopt practical steps needed to accelerate negotiations by April next year,” Malaysia’s International Trade and Industry Minister Rafidah Aziz said here at the end of the 38th Asean Economic Ministers meeting.
Asean felt that while studies for a single market in East Asia covering 16 countries was fine, what was more crucial was the pact between the grouping and Tokyo. Only then, should the grouping clinch similar single markets with China and South Korea and thereafter bring in Ausralia, New Zealand and India, ministers felt.