TOKYO (Reuters) - Japan indicated on Tuesday that it was nearing a decision on dropping its policy of testing all cattle for mad-cow disease, a move likely to move forward efforts to ease a nine-month-old ban on U.S. beef imports. 

"We plan to begin a review of our safety policy (on mad cow disease) together with the Labour and Welfare Ministry," Agriculture Minister Yoshiyuki Kamei told a news conference. 

He said the review would start after the final version of a report by an advisory panel, which had been studying Japan's policy of testing all cattle for the brain-wasting disease, was ready. 

Japan's policy to test all cattle for mad cow disease, and its demand that the United States adopt the same rule, has been a major stumbling block preventing the restart of U.S. beef exports to Japan. 

Top foreign buyer Japan halted all beef imports after the United States discovered its first case of mad cow disease, also known as bovine spongiform encephalopathy (BSE), last December, stopping annual trade worth about $1.4 billion. 

The focus now shifts to Japan's decision on the age at which BSE testing should begin. 

The report compiled by the panel of experts, attached to the governmental Food Safety Commission, on Monday noted that the youngest mad cow case found in Japan was that of a 21-month-old Holstein bull. 

It generally agreed that the discovery of the disease in a younger animal was difficult under current tests, which are not advanced enough to catch early traces of the disease due to its long incubation period. 

The report will be formalized after some modifications are made. 

Japan is expected to exclude cattle that are 20 months or younger from BSE checks. 

Kamei, however, refused to be drawn on the question of an appropriate age at which testing should begin. 

He was also asked about media reports that the United States had communicated its willingness to accept a testing regime that excludes cattle 24 months or younger. 

"I am not aware of all the finer details of the negotiation," Kamei said. 

He added that no date had yet been set for senior-level BSE talks between Japan and the United States, which have been delayed as Tokyo worked on a review of its safety policy for BSE. 

Tokyo and Washington had initially agreed to try to work out the terms for the resumption of beef trade by the end of the summer. 

Consumers are certain to protest the government's decision to drop its policy of testing all cattle, a measure introduced to ease public concerns after Japan discovered its own case of BSE in September 2001. 

The public is also certain to resist excluding cattle younger than 24 months given that the youngest BSE case found in Japan was at 21 months. 

A rare human form of BSE -- variant Creutzfeldt-Jakob Disease which can result from eating contaminated animal products has been blamed for the deaths of some 130 people in Europe, although there have been no reports of humans catching it in Japan.