The European Union is on course to conclude a new free trade agreement with Japan this year, according to a report.

A European Commission source close to the negotiations told Reuters that EU officials are not expecting the deal to slip beyond the end of 2017, with the intention to get it completed earlier, although a firm date cannot yet be confirmed.

The original goal had been to get the agreement signed before the end of 2016, but a number of issues remain outstanding, including the EU's desire to sell more food and drinks in Japan and gain access to Japanese public tenders, while Japan is seeking tariff-free access for its auto industry.

The source said: "I don't see any reason in the negotiations as they are why it shouldn't be done this year. And if it's not done this year, we will have to ask ourselves the serious question of whether it can be done at all."

Both countries are keen to bring the talks to a successful conclusion partly as a demonstration of their continued commitment to free trade in an increasingly protectionist landscape.

The EU was able to complete a new trade deal with Canada recently despite vocal opposition while Japan is seeking new trade partners following the US withdrawal from the planned Trans-Pacific Partnership alliance, which included Japan.