Japan and the European Union agreed to make every effort to reach a final agreement on a bilateral free trade deal as soon as possible, the Foreign Ministry said Wednesday, despite investment disputes being unresolved.
The two sides are looking to finalize negotiations on the free trade pact by the end of the year, diplomatic sources said.
During telephone talks, Foreign Minister Taro Kono and EU Trade Commissioner Cecilia Malmstrom shared the view that Tokyo and Brussels "could continue to directly communicate as necessary" toward the conclusion of the deal, the Japanese ministry said.
Malmstrom also talked separately with Economy, Trade and Industry Minister Hiroshige Seko.
Japan and the European Union sealed a broad accord on a free trade deal in July without an agreement on the settlement of investment disputes. The two sides have remained far apart on the issue, sources close to the matter said.
Tokyo and the 28-member bloc together account for some 30 percent of the world's gross domestic product. Japan is the European Union's second-biggest trading partner in Asia, after China.
The deal, broadly agreed on after about four years of talks, would cut European tariffs on Japanese cars and auto parts, while European farmers will see greater market access for products such as wine, cheese and meat in Japan.
Tokyo and Brussels have been redoubling their efforts recently to conclude a free trade deal amid uncertainty over multilateral free trade agreements.
The European Union has seen talks stalled on a free trade initiative with the United States, called Transatlantic Trade and Investment Partnership, after U.S. President Donald Trump came to power.
As for the bilateral trade pact, Tokyo has been calling for an investor-state dispute settlement system, which gives a company the right to sue a state for compensation if it believes its investment has been harmed by a government decision.
The European Union has opposed the approach, calling it a U.S.-led system and proposing setting up a permanent international investment court. Japan, however, is against the idea because of the costs involved.
Both sides are aiming to have the deal come into force in early 2019.
Earlier this month, Japan and other 10 Pacific Rim countries achieved a broad consensus on their free trade pact without the United States.
A series of free trade agreements would help shore up Japan's export-oriented economy but could deal a blow to the nation's agricultural sector, given a projected increase in cheap farm imports, analysts say.