"If you don't sign the protocol it will be a bad news for you," said EU foreign policy chief Javier Solana after talks with Iranian Foreign Minister Kamal Kharazi.
"Let me be very clear and very blunt," he added during a joint news conference with Kharazi.
"You don't have to expect anything because you signed a protocol which is a part of the Vienna agreement. The only thing you have to expect is that we will continue working as friends.
"There will be no reward for doing that. This is not a bargaining thing (it's) just like friends advise each other to do, to continue the relations in a deepening mode, which is just what we want to do," the EU official said.
The European Union has joined the wider international community in pressing Iran to sign an additional protocol to the Nuclear Non-Proliferation Treaty that would allow IAEA inspectors to descend on its nuclear sites without warning to ensure that Tehran was not secretly developing atomic weapons.
Brussels last month warned that, without credible guarantees over the protocol, it would review its economic ties with the country after an IAEA report on Iran is presented in Vienna on September 8.
"We want it to be signed: the sooner the better," said Solana. "It brings trust and confidence to the officials in Vienna and the members of the international community," he added.
Iran has come under increasing pressure, notably from the United States, to sign the additional protocol.
Concern over the issue resurfaced this week when a UN report said that inspectors had found two different types of highly-enriched nuclear particles at facilities in Iran not needed in civilian atomic programs.
Oil-rich Iran has denied that it was responsible for the find and insists its nuclear program is for civil purposes only. Kharazi said Thursday that the particles found by the United Nations originated from contaminated components imported from abroad.
He pointed Saturday to Iranian gestures of goodwill, saying Tehran had allowed IAEA inspectors to take samples at nuclear sites and had decided to open negotiations on signing the protocol.
Any refusal from Tehran to sign the additional protocol may convince IAEA governors to submit to US pressure and refer the matter to the UN Security Council, which would carry the threat of sanctions.
"We expect the European Union not to buckle under pressure and not let the (IAEA) governors politicize the affair," Kharazi said, alluding to US pressure on the UN's nuclear watchdog body.
The European Union, which unlike the United States advocates a policy of constructive engagement with the Islamic republic, is locked in trade talks with Iran. Brussels has made an agreement dependent on progress on Tehran's record on human rights, terror, peace in the Middle East and nuclear inspections.
The Iranian government has said it is open to signing the protocol provided that the IAEA provides "total" guarantees that inspectors are not given complete freedom of movement and would not violate military secrets.