DUBAI Persian Gulf Arab states head for a summit with the European Union in Spain today confident of signing a free-trade agreement after their recent endorsement of a regional customs union, the main hurdle to the much-delayed accord.

The Persian Gulf Cooperation Council (PGCC) is expected to use the February 27-28 Granada summit, the first high-level meeting between the two blocs since last September's terror attacks on the United States, to press the EU to sign the landmark accord and discuss other economic and political issues.

"The two sides have agreed to turn the page on several years of fruitless discussions and finalize a free-trade agreement, maybe in the course of this year," said Ahmad al-Harthi, head of Arab affairs at Oman's Foreign Ministry.

Harthi, who headed a PGCC delegation at last week's preparatory meeting in Brussels, put his optimism down to the Persian Gulf body's decision to push ahead with plans for a customs union in 2003 and monetary union by 2010.

The 15-state EU has insisted that the PGCC must have its own customs union before it signs a free-trade agreement with the six oil producers, in a campaign that has already lasted more than 13 years.

"There is no doubt that after the last Persian Gulf summit in Muscat, the door is wide open for the PGCC and EU to seal a free-trade agreement," said Bahraini economist Mohammad al-Assumi.

"Up until now, negotiations between the two parties have stalled on this obstacle, but that has been eliminated," he told AFP.

According to Assumi, "the conclusion of such an agreement no longer risks being blocked by traditional EU demands for improvement in human rights after the great progress shown by the Persian Gulf" states.

Kuwaiti economist Amer al-Tamimi said the creation of a customs union in the Persian Gulf will "boost the PGCC's position in negotiations with the EU."

"We also hope that industrial exports from the PGCC will make an impact on the European market when custom taxes are cut," Tamimi told AFP.

The Persian Gulf states -- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates -- account for 45 percent of the world's oil reserves and provide around 20 percent of the world's crude.

At the last PGCC summit in December 2001, the body decided to bring forward by two years to 2003 a customs union within the region, a precondition for the accord with the EU.

It also decided on the launch of a new single currency by January 1, 2010, "at the latest".

The PGCC has been trying since 1983 to seal a customs union as a vital step toward a Persian Gulf common market worth more than $80 billion in imports.

According to official statistics, trade between the two groups increased to 51.5 billion euros ($45 billion) in 2000 from to 37 billion euros ($32.4 billion) the year before.

Persian Gulf investments in the EU are estimated at $122 billion, representing 35 percent of all the region's investments abroad.