Free Trade Zone?

The long-awaited agreement that would regulate trade relations between the 27-nation EU and a number of Arab countries was originally envisioned in 1990, but talks have since stalled.

In 1999, the co-called Gulf Cooperation Council (GCC), which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, agreed to work on establishing a customs union.

Two years later, the EU moved to include the services sector in the negotiations. While the EU is the GCC's top trade partner, the Gulf group ranks number six for the EU.

"Clear political desire"

Speaking at the economic conference, Merkel now said that people had to move forward.

"I think that now is the time to come to an agreement," she said, according to Reuters news service. "That would be a significant signal."

Merkel had already discussed further negotiations on a free trade zone with GCC's general-secretary, Abdul Rahman, in Saudi Arabia on Sunday.

"There is a clear political desire on both sides to get a swift resolution to the disputed points," Reuters quoted a German official traveling with Merkel, who did not want to be named.

Middle East peace process

Merkel also met United Arab Emirates President Khalifa bin Zayed al-Nahayan as part of her talks with Gulf leaders on international efforts to revive the Middle East peace process.

The meeting focused on "developments in the region, notably the Palestinian question, the situation in Iraq and Lebanon" as well as economic ties between Berlin and Abu Dhabi, the state news agency WAM reported.

Merkel said Germany, as the current European Union president, would throw its weight behind the reconciliation talks in Mecca on Tuesday between Palestinian president Mahmud Abbas and Hamas political supremo Khaled Meshaal.

"We will do everything in our power to ensure the talks are successful," Merkel said, adding the EU would stay in close contact with Saudi Arabia, which is hosting the meeting.

Merkel said she was happy that King Abdullah, whom she met earlier in Riyadh, had signalled he was prepared "to attempt to bring the opposing parties in the Palestinian conflict together."