European Commissioner for Trade Cecilia Malmström and Japanese Foreign Minister Fumio Kishida are meeting to discuss the compromise at political level.
Malmstrom said: "An ambitious EU-Japan deal would send a powerful signal to the rest of the world that two of the largest economies are resisting protectionism, in favor of openness, trade, and investment".
The political green light on Thursday in Brussels came a day after negotiators for both sides reached a breakthrough over food and vehicle exports, which had been sticking points since talks started in 2013.
Almost 74,000 EU companies export to Japan, 78 percent of which are smaller firms, according to data from the European Commission.
For the EU and its Member States, the Economic Partnership Agreement will remove the vast majority of duties paid by EU companies, which sum up to €1 billion annually, open the Japanese market to key EU agricultural exports and increase opportunities in a range of sectors.
Europe has also agreed to a lowering of tariffs on scallops and other seafood imported from Japan.
The breakthrough capped four years of talks and came on the eve of a G-20 meeting in Germany at which Trump is expected to defend his protectionist stance on trade. That's relatively brief for big trade deals, though this agreement still needs to be completed. The EU retains the right to reimpose vehicle tariffs if Japan does not eliminate non-tariff barriers in the sector. As far as we are concerned, there is no protection in protectionism.
Malmström said, "We hope that we can triple our agricultural exports and European Union exports to Japan overall could be boosted one-third". A year ago it accounted for about $134 billion.
Japanese automobile and electronics manufacturers are expected to regain competitiveness in the European market in competition with rivals from South Korea, which has already signed a free trade pact with the bloc, while European farmers are seeking to tap deeper into the Japanese market for wine, cheese and meat.
Days later European Commission President Jean-Claude Juncker also met with the Japanese PM with Mrs Merkel, the leader of the EU's economy powerhouse, ordering him to deliver the deal as soon as possible.
It follows the collapse of the Trans-Pacific Partnership, which was abandoned by President Trump in January. "If I knew the recipe, I would use it more often", a senior European Union official told New Europe.
Cheeses like Gouda and Cheddar face tariffs of some 30 percent to enter the Japanese market. The legal text of the agreement has yet to be drafted.