The two sides have held five rounds of talks over a year and the Commission had decided to assess progress amid doubts whether Japan would really open up its markets for everything from cars to food.
European Union member states agreed Wednesday to continue the talks after taking the review into account, a Commission spokeswoman said.
“Only an agreement with a high level of ambition … especially in areas such as market access in goods, including agriculture, non-tariff measures, public procurement or geographical indications … will be acceptable to the EU,” the spokeswoman said.
The EU and Japan launched the talks a year ago, aiming for a tie-up that would account for about 30 percent of global economic output and 40 percent of world trade.
As well as Japan, the EU is involved in a series of negotiations on Free Trade Agreements with major partners such as the United States and India.
Japan too is in other talks, most notably on the 11-nation, US-backed Trans-Pacific Partnership.
On a visit to Europe in April, Japanese Prime Minister Shinzo Abe called on the EU to push ahead quickly with the negotiations, promising to do his part to ensure their success.