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GCC, EU to meet

in Luxembourg

DUBAI: Gulf Arab and European Union ministers meet in Luxembourg on Monday to try to deepen economic and political ties but officials said on Saturday they were sceptical the talks would produce results on a trade accord.

"That's exactly my innermost thoughts," a Gulf-based European official told Reuters. "We are expecting to release a joint statement but no agreements. You can say we will release a declaration of common goals."

He said the agenda included discussion of a draft condemning terrorism and violence in Lebanon, EU views on Israeli settlements, and development of the Palestinian economy.

Foreign ministers of the Gulf Cooperation Council's (GCC) Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Bahrain and Oman were due to attend a follow-up in Luxembourg on Monday of the Sharm al-Sheikh summit, which has since been postponed, before their talks with the EU.

The GCC and EU meet at least once a year in New York and once in either Europe or the Gulf to try to boost ties.

They have been working since 1988 on a free trade accord but few results have been announced.

"This is a continuation of our discussions with the EU," said Abdulatif al-Mugren, a GCC economic official. Asked if he thought it would lead to any accord, he said: "Not that soon."

Officials have said the GCC exports about $22 billion to the EU but has a trade deficit of about $15 billion with Europe.

Both sides say a main stumbling block to finalising the accord is that the GCC has so far failed to complete setting up a common market and unifying tariffs in the six states.

"The problem is the GCC itself...didn't reach a customs union," the EU official said. "Our declaration will include the hope that the GCC will establish a common tariff."

Some analysts in the Gulf see unified tariffs introduced this year. Tariffs range from four to 12 percent in the GCC, but it has so far categorised about 600 items - with about 200 outstanding - for which they will decide on a unified tariff.

Economists said progress on the trade accord in the past was hampered by opposition in the GCC, which includes the world's top oil producers, to a carbon tax backed by some EU members.

But the tax has since receded as a main obstacle. A Gulf official said it was less of an issue now because its implementation was a decision of individual EU countries.

Britain, for example, has said it opposed it.

The EU official said the agenda will include a GCC draft on promoting investments. GCC states are trying to privatise and diversify their economies and want foreign help to do it.-Reuter