WASHINGTON, Jan 6: A free trade deal between the US and the UAE is still possible, even though talks fell off track last year, a US business leader said on Friday. "The UAE is trying to make up their mind whether they want to kill it or not," Bill Reinsch, president of the National Foreign Trade Council, said during a discussion with reporters.

"It's been taking them a while. I think (lead US negotiator Shaun Donnelly) genuinely doesn't know they're going to do."

The US began talks with the Gulf Arab state in March 2005, about the same time as it launched negotiations with UAE's neighbour, Oman.

Trade between the US and UAE amounted to $10 billion in 2005, making it the third-largest US trading partner in the Middle East behind Israel and Saudi Arabia. The US imports relatively little from the UAE, but major items include crude oil, chemicals, aluminium and clothing. Leading US exports to the UAE include aircraft, drilling equipment, industrial engines and farm goods.The US and Oman signed a trade deal one year ago, but talks with the UAE lagged behind and were further damaged by a furore in 2006 over state-owned Dubai Ports World's purchase of certain US port operations.

DPW agreed to sell the port operations to soothe US congressional concerns, but the free trade talks remained on the back-burner for most of 2006. "I believe the American view is the ball in their court," said Reinsch, whose group has been a major supporter of the Bush administration's effort to secure free trade pacts in the Middle East.

Gretchen Hamel, a spokeswoman for the US Trade Representative's office, said US and UAE officials have met several times in the past two months to discuss the pact.

Negotiations since last March have focused on a number of difficult issues, particular regarding protection for investors under the pact, Hamel said.

"Both sides are engaged at senior levels. Most recently, (Assistant US Trade Representative) Donnelly was in the UAE in early December to hold talks with his counterparts. We are planning to hold subsequent discussions in February," she said.

The Bush administration needs to wrap up a deal with the UAE by late March to get it through Congress before its "trade promotion authority" expires at the end of June. That legislation allows the White House to negotiate trade agreements that cannot be amended by the Congress.

Democrats who now control the US Congress, they are expected to insist on strong protections for workers as part of any agreement with the UAE.—Reuters