Gulf states and the European Union will try to make progress on Wednesday towards a deal on free trade which is being held up by disagreement over exports, the EU foreign relations commissioner said.

The Gulf Co-operation Council (GCC), which groups Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the UAE, suspended trade talks with the EU in December, citing insistence on democracy clauses and European fears over the strength of the Gulf Arab petrochemicals sector.

'At the moment, the free trade agreement (FTA) deal is suspended with the GCC, but we are doing all we can to push it forward,' Benita Ferrero-Waldner told reporters in Muscat. 'The main obstacle is about exports.'

Saudi Arabia's Foreign minister Prince Saud Al-Faisal told reporters ahead of the annual talks: 'There is nothing new or any breakthrough regarding the FTA agreement.'

Aimed at boosting trade and investment between the two blocs, a Gulf-EU free trade pact would make it easier for Gulf states to export products, such as petrochemicals, to Europe, which imposes taxes on some imports from the region.

Saudi Arabia, the world's largest oil exporter, is developing its industrial sector in an effort to diversify its economy. Saudi Arabian Basic Industries (Sabic) is one of the biggest petrochemical firms in the world.

An EU delegate who declined to be identified told Reuters a deal was 'unlikely' on Wednesday, but the meeting would help resolve differences to pave the way for an agreement.

Stumbling blocks also included human rights issues and copyright laws, the delegate added.

The trade talks have been underway for nearly two decades. The European Parliament president said in December GCC countries should pursue democratic reform, though without feeling they must follow models not in line with their traditions.

Apart from Kuwait, whose elected legislature has a history of challenging the government, other Gulf Arab monarchies are inching slowly towards a measure of popular representation.-Reuters