INTERVIEW - Gulf Arabs look east after EU trade deal hits wall

By Daliah Merzaban

MUSCAT (Reuters) - Gulf Arab oil producers are expected to sign trade pacts with China, South Korea, Australia and New Zealand starting this year after talks with the European Union for a similar deal hit a wall, an Omani official said.

The Gulf Cooperation Council (GCC) -- an economic and political bloc of six nations -- suspended talks with the EU late in 2008 after a disagreement on human rights and democracy derailed two decades of negotiations.

The alliance that includes world top oil exporter Saudi Arabia, the largest Arab economy and a member of the G20, is now looking at EU's rivals in the east, Abdulmalik al-Hinai, undersecretary for economic affairs at Oman's Ministry of National Economy, told Reuters in an interview late on Friday.

"This week or next week we will start a new round of negotiations with China," Hinai said on the sidelines of a meeting of GCC finance ministers.

"We have already finished the fifth round of talks with New Zealand and we are at a very advanced stage ... After one more round before the end of the year we should be ready to sign."

Oman is chairing the GCC this year. The bloc, which also includes the United Arab Emirates, Qatar, Kuwait and Bahrain, signed a free trade agreement with Singapore in 2008.

Australian and Gulf negotiators will also be at a meeting in the Omani capital Muscat on Sunday, Hinai said, adding that he expects progress in the talks.

"These two countries as well as (South) Korea, I am expecting we will be finished in the near future," Hinai said, referring to Australia and New Zealand.