Japan and the European Union were to kick off two days of talks on Friday in Tokyo with a view to reaching a broad agreement on bilateral free trade, the Japanese government said.
An agreement between two of the world's largest economies would be seen as a political opportunity to reject U.S. President Donald Trump's protectionist stance.
Soon after being inaugurated, Trump withdrew from the Trans-Pacific Partnership (TPP) free trade deal signed by 12 Pacific Rim nations, including Japan and the U.S., in February 2016.
EU Trade Commissioner Cecilia Malmstrom is set to arrive in Tokyo Friday for two days of talks with Japanese Foreign Minister Fumio Kishida.
"I expect the negotiations will be extremely difficult," Kishida told reporters late Thursday.
Chief trade negotiators from the two sides have been holding informal talks in Tokyo for the past two weeks.
Japan and the EU, which have been negotiating a free trade pact since March 2013, have been unable to agree on whether and when to eliminate tariffs on Japanese cars exported to Europe or on EU farm products shipped to Japan, such as cheese.
Japanese Prime Minister Shinzo Abe's ruling Liberal Democratic Party has urged Tokyo not to make concessions on farm and dairy items.
The two sides are hoping to reach a broad free trade agreement before Abe and EU leaders hold a meeting in Brussels on July 6, Jiji Press reported, citing unnamed sources.
Abe has previously stated his eagerness to clinch a deal at the Japan-EU leaders' talks, which are to take place a day ahead of the G20 summit in Germany.