DUBAI: The GCC-EU free trade talks are on the right track despite obstacles ranging from controversial cartoons to oil tariffs, reports said yesterday.
EU Trade Commissioner Peter Mandelson said although negotiators missed a 2005 year-end deadline and despite the political firestorm sparked by Danish cartoons it is possible that the trade agreement could be inked following his next visit in April.
"I think it could be in May when we initial an agreement," he said.
"It does require a strong understanding of each other by both sides. We both have strong economic interests, we both have sensitivities and there has to be a reciprocal understanding between us."
With over 80 billion euros worth of goods exchanged last year, the EU is already by far the largest trade partner with the GCC. The GCC and the EU signed a framework economic co-operation agreement in 1988 but have so far failed to agree to a free trade deal.
In late October, a newspaper report said that negotiations between the EU and the GCC remained stalled over several unresolved issues namely EU tariffs on petrochemical products and Gulf countries' protection of their telecom and banking sectors.
EU taxes on aluminium and petrochemical imports from GCC countries are also a bump in the road, since GCC countries can manufacture those products at lower cost than Europe.
Mandelson said the EU has shown flexibility in trying to address the GCC's concerns, adding that negotiations are "a two-way process".
"But with commitment on both sides, I think the outstanding questions can be solved," he said, adding he had offered to visit the GCC personally three times since December.
"It is unfortunate the GCC side has not been able to hold the meetings with me on any of these occasions, but I do remain convinced that a ministerial meeting that gives political guidance to our technical negotiators is the way forward."
One of the main concerns for the EU is making sure that any plan offers benefits that are above and beyond what is already granted by existing agreements, something Mandelson calls "WTO-plus".
"That is why I also must make sure that what is being offered to us doesn't put EU companies in a less favourable position than their competitors, for example from the United States," he added.
Aside from any trade issues, the shadow of the GCC's reaction to cartoons published in a Danish newspaper still looms in the background.
A Saudi official, involved in the talks, said "at this stage we still see it as consumer boycott action but if the protests continue, inevitably the issue will have to be brought into discussions.
"The longer it takes to resolve these technical difficulties and the longer the cartoon crisis continues the more chance there is of final negotiations being affected."
Still, Mandelson said economic ties between the two regions cannot be weakened, even by a diplomatic flap that saw Danish embassies attacked by protesters.
"I think we all feel that in wider terms, and in the long term, there is too much at stake for us to allow us to be blown off course by what was a very unfortunate flare-up which has subsided to an extent, but which has left difficult traces between us," he said.