European Union foreign ministers on Monday agreed to unfreeze a trade agreement with Serbia, paving the way for the former Yugoslav republic to continue EU accession talks.

Serbia's aspirations for membership of the 27-nation bloc had been stalled for 18 months by the Dutch government which criticized Belgrade for not cooperating with a UN war crimes court.

The Netherlands - where the International Criminal Tribunal for former Yugoslavia (ICTY) is based - had been the only EU member blocking the trade deal, saying that Bosnian Serb military commander Ratko Mladic needed to be arrested before the decision would be reversed.

Mladic has been indicted by the UN tribunal in The Hague for genocide over the 1995 massacre of 8,000 Muslims at Srebrenica and the takeover of Sarajevo.

However, last week, Serge Brammertz, the UN's chief prosecutor at the ICTY, told the UN that Serbia's "cooperation has continued to progress".

"The Dutch have said that they are making a gesture [towards Serbia] while keeping up pressure for it to cooperate with the [ICTY]," a European diplomat said in Brussels.

However, the EU has not yet agreed to activate the full Stabilization and Association Accord, which is considered to be the first official step to EU membership.

Serbia's neighbor Macedonia is also waiting for its own EU accession talks to begin.

vj/AFP/Reuters/AP/dpa

Editor: Susan Houlton