GCC suspends free trade talks with European Union

Dubai: The six countries of the Gulf Cooperation Council suspended free-trade negotiations with the European Union that have been going on for about two decades after failing to overcome obstacles to an agreement.

"In view of the fact that there was no progress as the European side held its previous position, the council countries have suspended the negotiations," GCC Secretary-General Abdul Rahman Al Attiyah said in a speech posted on the bloc's website. It didn't provide further information.

Free-trade negotiations between the 27-nation EU and the GCC, which includes Saudi Arabia, the world's largest oil producer, and the UAE, have faltered over disagreements on petrochemical subsidies and foreign companies holding majority stakes in GCC companies. Attiyah's statement dated May 25 was made as German Chancellor Angela Merkel tours the Gulf.

The announcement is a way of "telling the Eur-opeans that they have to make progress," said John Sfakianakis, chief economist at Banque Saudi Fransi. "The biggest issue is subsidies for petrochemicals and other sectors that are based on cheap energy in the region. The Europeans have to realise that this is the region's competitive advantage."

The free-trade agreement has been under negotiation since 1991, according to information on the website of the European Union. GCC member states have resisted attaching any political conditions to an agreement with the EU.