The first step toward that objective would be a meeting between Japanese Prime Minister Shinzo Abe and European Council President Herman Van Rompuy set for March 25 in Tokyo, Kyodo said, citing sources at the prime minister's office and in Europe.
The two leaders are expected to announce an inaugural round of the talks on an EPA. which could take up to four years to complete, the report said.
Japan and the EU account for about 30 percent of the global gross domestic product, it said.
For an EPA effort to succeed, Japan would be required to scrap a range of non-tariff trade barriers, the report said.
The EU, in turn, would be asked to eliminate its 10 percent tariff on imported vehicles to benefit the Japanese automobile industry, which could be one of the main beneficiaries of an EPA, Kyodo said.
The report said the European Commission estimates a free-trade arrangement would boost its exports to Japan by about 30 percent and create around 400,000 jobs in its member countries.