Mandelson said the ban on foreign ownership was the major sticking point in finishing free trade negotiations between the two multinational blocs which, he predicted, would produce a signed agreement by year’s end.
Current laws in the GCC states require a majority stake in any business to be held by a local citizen. EU negotiators want those laws phased out as part of any trade agreement.
"Any European who forms a business wants to control and manage its business," Mandelson said on the sidelines of the Forbes magazine Middle East CEO summit in Doha. "It’s too powerful a disincentive for a business to come here and not have majority control."
Mandelson said he was "prepared to be flexible" on some points but labelled the ownership restrictions outdated.
Dropping the protectionist rules would dampen inflation, diversify economies and provide consumers in the six GCC states with cheaper, better quality European consumer goods, machinery and chemicals.
"It’s time to move on," Mandelson said, ahead of renewed talks with Saudi-led Gulf finance ministers this week.
"They’re foregoing investments that will benefit their economies. I’m asking the Gulf states to stretch further."
For its part, the EU has agreed to drop 100 per cent of its import tariffs on Gulf Arab goods and services over four years, Mandelson said.
