The European Union hopes to sign a trade deal with Ukraine and open trade talks with Georgia by the end of the year despite concerns over energy policy, farm goods and corruption, an EU trade official said.

The deal with Ukraine is designed to stimulate trade already worth an estimated 22 billion euros ($30 billion) a year while contacts with Georgia would launch negotiations for a free-trade pact.

"We might be able to initial the deal (with Ukraine) in December," Philippe Cuisson, a senior European Commission trade official, told the European Parliament's international trade committee.

"If Georgia is ready, if they have made all the reforms necessary, we'd be very happy to start negotiations in the next few months," he said, adding that the EU and Georgia could announce plans for trade talks at a meeting of EU and East European leaders next week.

The EU, the world's largest trading bloc, is pursuing an ambitious programme of bilateral trade negotiations as hopes for a global trade accord at the World Trade Organization wither.

Deals with its neighbours to the east are politically fraught -- EU foreign ministers this month threatened to freeze talks with Ukraine over the trial of former leader Yulia Tymoshenko -- and may anger Russia.

But they are economically interesting because of the promise of greater access to farm and energy commodities, particularly in Ukraine, which has large coal and electricity industries.

"Positive" Meeting with Ukraine
A meeting this week between EU Trade Commissioner Karel De Gucht and Ukrainian Deputy Prime Minister Andriy Klyuev had been "very positive, particularly because the Ukrainian aide agreed to bear in mind our red lines", Cuisson said.

"The trade commissioner made it very clear to the deputy prime minister that we cannot make a deal with Ukraine unless we have a deal on energy," he said.

The EU wants special clauses for trade in energy to secure imports of Russian gas passing in pipelines through Ukraine, as well as for agricultural trade.

Aside from concerns of EU farmers about an influx of cheap Ukrainian goods, legal loopholes and corruption currently make the bloc vulnerable to false claims of duty reductions in farm goods, particularly sugar.

Regarding Georgia, the EU is worried about corruption and a lack of transparency and the bloc has demanded that Georgia implement wide-ranging reforms.

The promise of a trade pact with the EU could soften Georgia's threat to veto Russia's accession to the WTO. The EU favours Russian entry.

Speaking at a seminar at the European Parliament this week, Ukraine's Klyuev said Kiev was working toward a political and trade agreement with Europe before year's end.

"I'm hopeful that the negotiations (for a free trade area) will be finalised by the end of the year," Klyuev told EU lawmakers, executives and officials.

Ukraine should take as its example for reform the former members of the Soviet Union that are now members of the EU - such as Poland, Hungary and Czech Republic, he added.

These countries "stepped up their reforms. It was a very powerful incentive for their economic development", he said.

"We believe that this is the road that we should also take."

EU trade pacts need approval from the bloc's 27 national governments and the European Parliament. (Reuters)