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Wed 24 Dec 2008 01:07 AM

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GCC suspends EU free-trade talks

20-year impasse continues after 'last-minute retraction by EU on draft accord provokes reaction.

The six-nation Gulf Cooperation Council has suspended talks with the European Union over a free-trade agreement, the GCC's secretary general said on Tuesday.

"We have informed the European side of the suspension of negotiations on a free-trade accord," said Abderrahman Al-Attiyah, interviewed by telephone in Muscat, where he is preparing for the annual GCC summit.

"We are suspending the negotiations until the European side agrees to sign the [most recent] draft accord," adding that the petroleum-rich monarchies had "made many concessions and responded favourably to the EU's many demands."

The decision came as no surprise, with member nation Qatar warning on Dec. 15 that a suspension was in the offing if an impasse in the 20-year-old negotiations continued.

"Some day in the near future the GCC states will decide to suspend the talks which have so far had no result," Prime Minister Sheikh Hamad bin Jassem Al-Thani said in Singapore.

The GCC - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE - has been in talks with the now 27-member EU about a free trade agreement since 1988.

Sheikh Hamad said the accord should have been signed at the end of November during a visit to Qatar by Nicolas Sarkozy, the president of France which holds the rotating EU presidency. He said the European Union "retracted at the last minute."

"The negotiations with Europe have gone on for too long, and our European partner must know that the talks cannot last indefinitely," Sheikh Hamad said. Europe "is the GCC's largest trading partner, and if it wishes to expand on that partnership it must reconsider" its position on the talks, he said.

In April, EU External Relations Commissioner Benita Ferrero-Waldner said the question of human rights was one of the points being negotiated. Al-Attiyah said in June the GCC would not accept any political conditions.

"The GCC countries reject the imposition of conditions and political demands by the European side in order to sign an economic agreement," Ferrero-Waldner said. Periodically over the years, a deal has been said to be imminent, only for talks to stall.

"Every time we start a round of talks, the European party surprises us by raising new questions or by mixing politics and trade," Al-Attiya was quoted by the UAE official news agency WAM as saying on Tuesday.

"The GCC is ready to sign the accord when the European side accepts the few final propositions made by the Gulf countries. If not, the GCC is not prepared to resume negotiations."

A Western diplomat in Riyadh said that, for the European Union, the "sticking point was GCC export duties on a number of goods, which the EU could not accept because it would set a precedent for other countries.

"Also the EU wanted more access for EU services: banks, insurance, etc. On the human rights clause, the EU believed that a compromise was near."

In an interview published on Tuesday in the pan-Arab daily Al-Hayat, Al-Attiyah said he had written to the European Commission at the beginning of December recommending that talks be suspended.

The GCC is also discussing trade deals with Australia, China, India, Japan and New Zealand, as well as with the European Free Trade Association.

Al-Attiyah said the GCC would probably conclude a deal with EFTA (Island, Liechtenstein, Norway and Switzerland) at the beginning of 2009. He also said the GCC is not prepared to resume talks with the EU because it is in negotiations with those other countries and groups.