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Tue 16 Dec 2008 02:37 AM

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EU-Gulf trade agreement unlikely says France

Despite optimism in October, long-running negotiations remain blocked.

It is unlikely that the European Union will reach a trade agreement with the Gulf Arab states, Anne-Marie Idrac, France's junior minister for trade, told newswire Reuters on Monday.In October she had said it might be possible to sign an agreement this year.

"We have been working on a free trade agreement between the European Union and the Gulf for 17 years. I hoped for a moment that it would be possible to get there," said Idrac, who headed state rail company SNCF before joining the government in May.

"Unfortunately it seems that we will not arrive at an agreement. If we were not able to seize the chance of the French (EU) presidency, of Nicolas Sarkozy's high profile... I think that it will be even harder now."

The pact has been much delayed and in June a senior official of the Gulf Cooperation Council - a loose political and economic alliance of six Gulf Arab nations including top oil exporter Saudi Arabia - warned the group may scrap it.

Talks between the group and the EU began in 1990 but were slowed by the GCC agreeing only in 1999 to move towards forming a customs union and a new EU negotiating strategy adopted in 2001 to include the services sector in the talks.

As well as seeking to boost trade and investment, the agreement would also have covered political issues such as human rights, illegal immigration and the fight against terrorism.

Idrac said protectionism was responsible for the failed deal.

"The point we particularly stumbled on is protectionism. That is why it is very annoying," she said.

Idrac also played down the possibility of reaching agreement in World Trade Organisation's Doha round of talks next year.

The WTO dropped plans on Friday to seek a breakthrough for a new trade deal this year risking an increase in protectionism as the world economy suffers its worst crisis in decades.

"It is very difficult because the key players are in difficult political situations," she said.

"China has seen its exports fall for the first time in 20 years, the United States, is in an intermediary political situation, India with coming elections."

She said it was very important to avoid protectionism.

"I am quite worried, not because of protectionism measures which have been taken, I haven't seen any... but because of threats which could come from Latin America or the United States concerning certain agricultural products," she said. (Reuters)