* PM Kan willing to tackle non-tariff barriers-Nikkei
* Japan business fears being left behind by South Korea (Adds comments, background)
TOKYO, Nov 11 (Reuters) - Japan aims to launch economic partnership talks with the European Union next spring, the Nikkei business daily said on Thursday, as Tokyo struggles to catch up with Asian rival South Korea in sealing trade deals.
Prime Minister Naoto Kan will propose the timetable to European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso on Friday on the sidelines of the Group of 20 summit in Seoul, the Nikkei said.
Kan will convey Japan's willingness to tackle non-tariff trade barriers, a condition the EU has set for opening negotiations, the Nikkei said.
Businesses are urging Japan's government to sign trade deals to boost the competitiveness of electronics and automobile exports in the face of fierce competition from South Korea, whose pact with the European Union takes effect in July.
Japan's exports to the EU came to more than $72 billion in 2009, while imports from the EU totalled more than $59 billion, according to Japanese trade organisation JETRO.
Tokyo said in a basic policy document unveiled on Saturday it would seek a deal with the EU soon.
The government's expression of interest in the Trans-Pacific Partnership, a U.S.-led free trade pact, has sparked vocal opposition from the agricultural lobby, which wields considerable political clout due to an electoral system that places greater weight on rural votes.
But a bilateral Economic Partnership Agreement (EPA) could allow for the exclusion of sensitive agricultural products, the Nikkei said.
"Whether or not Japan can make progress on free trade will be a litmus test that determines whether it can maintain economic growth," said Toshihiro Nagahama, chief economist at Dai-ichi Seimei Research Institute.
"South Korea is ahead with both the United States and Europe. If Japan doesn't make progress, it will be left behind," he added, saying any negative effects of the deal would be outweighed by the positive.
An official at Japan's Trade Ministry said it had been Japan's intention for some time to seek progress on trade at an EU-Japan summit in spring 2011, but that she expected no fresh steps at G20.
Seoul and Washington failed to reach an agreement on revamping an existing trade deal at a meeting on Thursday between President Barack Obama and his South Korean counterpart Lee Myung-bak in Seoul on the sidelines of the G20 summit.
After the G20 meeting ends on Friday many of the leaders will travel to Japan for a weekend summit of the Asia-Pacific Economic Cooperation (APEC) forum, with the focus again on boosting trade and shoring up economic growth. (Reporting by Isabel Reynolds in TOKYO and Shravya Jain in BANGALORE; Editing by Michael Watson)