The Brussels-based lobby group wants a high-level EU-Japan Economic Partnership Council to replace a ten-year agreement which expires this year.
In a letter to European Council President Herman Van Rompuy and European Commission President José Manuel Barroso, BusinessEurope cautions against negotiating a new bilateral trade agreement.
Van Rompuy and Barroso will meet Japanese Prime Minister Hatoyama on Wednesday (28 April) at the 19th EU-Japan political summit. The meeting falls as the current ten-year action plan on Europe's relationship with Japan comes to an end.
Discussions are under way between European and Japanese authorities to consider whether a Free Trade Agreement or other forms of deal could be put in place to govern the EU-Japan relationship.
"We do not think pursuing these approaches would result in an acceptable balance between different interests from the EU and Japan in the areas of tariffs, regulatory and non-tariff barriers," said Philippe de Buck, director-general of BusinessEurope.
De Buck said European firms see great potential for trade and investment between the EU and Japan and want Wednesday's talks to focus on reducing trade barriers and dealing with "cultural differences and consumer preferences".
Officials are currently weighing whether to launch a feasibility study on what form bilateral relations between Japan and Europe should take. Any such study should focus on understanding barriers to trade and investment, says de Buck, and should not automatically lead to talks on a new trade deal.
The alternative "Economic Partnership Council" advocated by BusinessEurope would set down concrete targets to be achieved within short timeframes, according to the letter, which was also sent to EU foreign affairs chief Catherine Ashton and Trade Commissioner Karel de Gucht.
On the first day of the EU's Asian tour, Van Rompuy said some in Brussels feel it is premature to commit to a free trade agreement. Speaking at Kobe University, he said there are many non-tariff barriers to trade which hamper access to the Japanese market.
The high-level EU delegation in Japan will also visit China this week where protectionism, anti-dumping and currency revaluation will be on the agenda.