The European Union is broadly satisfied with Japan's progress in opening up its markets in talks towards an ambitious free-trade deal and will likely approve the continuation of negotiations later this month.
According to an EU document and people briefed on the issue, Japan has complied with, or was in the process of complying with, the majority of its commitments in sectors ranging from organic food to textiles.
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 willingness to bring down barriers to European exports.
"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."
But the European Union is still demanding that Japan end preferential tax treatment for domestically-produced small "kei" cars", which European carmakers such as Fiat and PSA Peugeot Citroen say hampers their access to the Japanese market.
Brussels is also warning that work to streamline Japan's process of authorising medical devices could take several years.
EU countries and the European Commission are expected to decide whether to continue talks with Japan at a meeting in Brussels on May 23.
(Reporting by Robin Emmott and Philip Blenkinsop)