* EU to decide if talks can continue for deal by end-2015
* Abe due to hold summit with EU in Brussels on Wednesday
* Japan, EU also negotiating trade deals with US
(Recasts; adds quotes, economic impact of trade deal)
By Robin Emmott
BRUSSELS, May 5 The European Union will tell
Japanese Prime Minister Shinzo Abe on Wednesday that Brussels is
broadly satisfied with Japan's progress in negotiations towards
an ambitious free-trade deal, likely allowing talks to continue,
according to EU documents.
On the eve of Abe's visit to Brussels, one EU document shows
that Japan has complied with, or is in the process of complying
with, the majority of its commitments to help reach a trade pact
that could encompass a third of global economic output.
Doubtful of Tokyo's willingness to bring down barriers to
European exports, EU trade negotiators were told to pull the
plug on talks, which began in April 2013, after a year if Japan
did not show sufficient progress in areas from food to cars.
Abe, who arrives on Tuesday night for the EU summit the next
day, has touted trade deals with Europe and the United States as
crucial for Japan. But he failed to wrap up negotiations with
Washington last month because of a pledge to protect Japan's
politically powerful farmers.
After five rounds of talks with the European Union, the
world's largest trading bloc, EU officials and diplomats say
Japan has done enough for the negotiations with Europe to
continue, although EU countries will likely decide on May 23.
"Japan has demonstrated it is as serious as any other of our
trading partners," said one person close to the issue who
declined to be identified. "We should allow talks to continue.
If we push Japan too far, we will lose their confidence."
A draft of the EU-Japan summit's final statement seen by
Reuters also reaffirms the "vital role that a fully
comprehensive and ambitious free-trade agreement could play".
Abe has said he hopes to agree the pact by the end of next year.
Potentially one of the world's biggest trade deals, an
EU-Japan agreement could lift the economic output of both sides
by almost 1 percent, according to the European Commission, at a
time when both are struggling to generate growth.
Japan is the EU's seventh-largest export market buying some
70 billion euros ($96 billion) worth of European goods last
year. For Japan, the EU ranks as its third-biggest market with
shipments of 6.5 trillion yen ($63.57 billion) in 2012.
Japan already has low or no import tariffs on EU goods, with
zero duty on cars, Scotch whisky or French cognac, for instance.
Instead, the prize for Europe is in having Japan remove special
regulations on everything from music to imported cars.
BARRIERS TO CARS
A Japan-EU deal would also fit into an emerging patchwork of
sophisticated accords between the world's richest countries as
they search for growth following the worst financial crisis in a
generation and the failure of global free-trade talks.
The European Union is negotiating a separate trade pact with
the United States that could generate $100 billion in additional
economic output a year on both sides of the Atlantic.
European Commission President Jose Manuel Barroso and
European Council President Herman Van Rompuy are expected to
relay a message of support to Abe's trade agenda during their
90-minute summit and lunch on Wednesday, although French and
Italian carmakers want to keep pressure on Japan.
In its review of Japan's progress in dropping trade
barriers, the European Union is still demanding that Japan end
preferential tax treatment for domestically produced
small-engine cars. European carmakers such as Fiat and
PSA Peugeot Citroen say they hamper their access to
the Japanese market.
European cars are unable to benefit from Japanese tax breaks
because they do not fit the criteria on size and power, an
annoyance to Italy and France despite their specialisation in
EU carmakers say other barriers also hinder exports. Japan's
use of its own safety and environmental standards rather than
international ones adopted by the EU make approvals costly and
time-consuming for Europeans.
Brussels is also warning that work to streamline Japan's
process of authorising medical devices could take several years.
(Additional reporting by Philip Blenkinsop; Editing by Hugh