With the EU and Japan both facing an ageing population and increasing pressures from low-cost producers, Japan and the EU must both pursue their common goals of economic reform and developing new technologies, he said.

"We cannot base our prosperity on primary resources and we don't want to base our prosperity on cheap labour," Barroso said in a speech to students at Kobe University in western Japan.

"For both of us, our future prosperity depends on knowledge," he said, calling for "open cross-border cooperation" in research and development.

Barroso also sought to allay any concerns about whether the EU was "a fit partner" for Japan after the turmoil in the 25-member bloc last year sparked by French and Dutch voters' rejection of the draft EU constitution.

"As the saying goes, the EU thrives on crisis. We certainly got something of a shock to the system, and a strong reminder that our principal task is to focus on what our citizens want," Barroso said.

The European Union had not faltered in pushing ahead with an agenda for increased prosperity and jobs, said the former Portuguese premier, who arrived in Japan on Friday for a five-day visit.

"We are very much open for business, and open for contacts with our friends and partners, open to those, like Japan, who share our values and aspirations."

Barroso and Japanese Prime Minister Junichiro Koizumi will take part in a three-way summit Monday with Chancellor Wolfgang Schuessel of Austria, the current EU president.

Barroso said bilateral trade, the environment, energy, science and technology would be on the agenda, along with global issues including East Asian diplomacy, development assistance and reform of the United Nations.