MAROS Sefcovic has said Brussels is "working closely and constructively" with the British government to break the deadlock around the protocol.
The European Commission vice president said the bloc would "spare no effort" in reaching a settlement with the UK but stressed that "significant work" was needed before an agreement could be signed off.
His remarks came amid fresh reports of an imminent breakthrough on the post-Brexit trading arrangements, which a year ago led the DUP to collapse the devolved institutions in protest.
Mr Sefcovic told a press conference in Brussels that "intensive scoping" to explore agreed solutions was ongoing.
He said the European Commission and the British government were "working closely and constructively".
"Progress is being made but difficulties remain," he said.
He said commission president Ursula Von der Leyen had a "trusting relationship" with British Prime Minister Rishi Sunak, and likewise his own relationship with Foreign Secretary James Cleverly and Secretary of State Chris Heaton-Harris was positive.
"We agree that joint solutions are needed to respond to the real-life concerns of all communities in Northern Ireland," he said.
"So, all in all, it is not an easy exercise but it is certainly a necessary one, and the commission will spare no efforts to agree a joint way forward."
Downing Street has declined to comment on reports carried yesterday by RTÉ that said the EU will accept the principle that goods shipped from Britain that were destined solely for Northern Ireland should be treated differently to goods moving across the border into the single market.
It meant Brussels had agreed to the long-speculated 'red' and 'green' lane model, substantially increasing the prospects of a final deal.
DUP MP Ian Paisley said any deal between the UK and the EU also had to deal with the role of the European Court of Justice (ECJ) as the final arbiter in protocol-related trade disputes.
He told the BBC that the protocol must be replaced by arrangements unionists could support.
"I believe that until we have this protocol replaced, the border removed in the Irish Sea, we have ourselves subject only to UK rule then there will be no power-sharing," he said.
"It is either protocol or power-sharing – we can't have both."
Sinn Féin's Declan Kearney said reports of progress in the talks were "very encouraging".
“It is vitally important that the European Commission and the British government officials continue these efforts to resolve any remaining issues so our businesses, farmers and families can be assured their interests will be fully protected and allows the Protocol to work smoothly," the South Antrim MLA said.
"The political stalemate caused during the last year which has blocked restoration of the Executive has exacerbated all of the challenges which we face in the north. The cost of living crisis continues to spiral and our health and social care service is at breaking point."
Alliance deputy leader Stephen Farry also welcomed reports of progress on the "red and green lanes concept".
"While we will still await the conclusion of an overall package of measures to address the practical challenges related to the protocol, this aspect would be a key aspect of any overall agreement," he said.
"The recent agreement on data-sharing has clearly been a major enabler for this – the focus has to be on finding pragmatic outcomes that are realistically available, not putting in place impossible red-line demands."
