European air-safety regulators are scrambling to adopt regionwide rules for flying unmanned aircraft, but the effort is whipsawed between political limits on their power and escalating industry demands for swift but lenient regulation.

Those crosscurrents were evident during an international safety conference in Washington last week, with senior European Aviation Safety Agency officials repeatedly inviting manufacturer and drone users to take the lead in developing consensus technical and operational standards.

The stakes are significant because Europe’s budding drone industry—seeking to fend off restrictive oversight—wants to ensure it can keep pace with rivals in the U.S., where regulators are further along in implementing comprehensive rules for small drones flying at low altitudes and weighing under 55 pounds.

At this point the European Union is still in the process of giving EASA clear-cut legal authority to regulate drones of any size, and 18 countries already have enacted individual national rules.

“It’s late, but not too late” to impose common-sense regional requirements, according to Patrick Ky, EASA’s executive director, who said he expects the political and technical debates to be resolved by the end of the year. “There is a strong willingness, particularly from the operators” to have common European rules, he said in an interview during the conference.

The agency is developing proposed rules that for smaller drones, will leave some important details and enforcement to national aviation authorities. A draft is expected to be available as early as July.

“I wish we had started before,” Mr. Ky said, though he still expects the rules to become final around the end of the year, roughly the same time frame in which European Union leaders are looking to grant EASA power to implement them.

Luc Tytgat, the EASA official in charge of drones, emphasized the agency’s eagerness to mandate rules the industry finds acceptable. “We put the responsibility on industry to come with different scenarios” and propose risk-based solutions, he told the conference.

One concept under consideration is to have multinational teams assessing prototypes and considering ways to integrate lessons learned into future standards.

Mr. Tytgat said that “pressure by industry” sparked the divergent country responses, creating complications for EASA. But during one panel session, he said “you have seen how much regulators are ready to help industry.” EASA is “calling for industry to come in with standards” that can be used to reassure regulators about safety issues, he added.

In sketching out its strategy, EASA has released a regulatory road map highlighting the importance of promoting innovation rather than simply transposing “the system put in place for manned aviation.”

At the same time, there is rising public concern about midair close calls between drones and manned aircraft, including commercial jets. EASA has created a government-industry task force to study potential ramifications of such conflicts and how much damage collision with a small drone could inflict on a jetliner.

Scheduled to release its findings in late July, the group will look at the vulnerabilities of windshields and engines to such collisions; analyze existing data about drone collisions; and review relevant incidents in European airspace.