The Dutch government on Monday vetoed European Union attempts to implement a trade deal with Serbia, saying that Belgrade is still not cooperating fully with international war-crimes prosecutors.

"There is better cooperation, but I do not find myself in the position to be able to conclude that there is full cooperation," Dutch Foreign Minister Maxime Verhagen told journalists after the meeting with EU counterparts in Brussels.

In April the EU signed two key deals - a Stabilization and Association Agreement (SAA) on political, legal and economic cooperation and a separate Interim Agreement
(IA) on trade - with Serbia in a bid to boost pro-EU forces in the country.

But the Dutch government blocked both deals until Belgrade begins full cooperation with the International Criminal Tribunal for the Former Yugoslavia (ICTY).

The Dutch are particularly sensitive to the issue since Dutch UN peacekeepers failed to protect the safe haven of Srebrenica in Bosnia in 1995 - paving the way for Bosnian Serb forces under fugitive Ratko Mladic to kill an estimated 8,000 Bosnian Muslims.

On July 21 Serb officials arrested Mladic's former political leader, Radovan Karadzic, and handed him over to The Hague.

Many EU member states argued that the bloc should therefore reward the Serbian government by implementing the interim agreement.

"It's right to respond to this improved Serbian position with a move from the EU," British foreign minister David Miliband said Monday.

"The arrest of Radovan Karadzic in July was a milestone and should be recognised by the EU by starting to implement the interim agreement," added EU Enlargement Commissioner Olli Rehn.

But Verhagen stressed that ICTY Chief Prosecutor Serge Brammertz, who briefed ministers on Monday, had not yet said that Belgrade was cooperating fully, highlighting witness-protection programmes and the failure to arrest Mladic as key points.

Following the Dutch veto, EU ministers are set to return to the Serbian question at their next meeting in four weeks' time.

Serbian officials expressed disappointment at the decision, but said that Belgrade will not give up its goal to become an EU member.

"We will continue our cooperation with the Hague Tribunal and we will fulfill our international obligations. Cooperation with the Hague is our law and we are obliged to respect it," President Boris Tadic told journalists in Belgrade.

Tadic called on Mladic and Hadzic to give themselves up and "lift a heavy load from Serbia's shoulders".

Despite the Dutch veto, Serbia could still become a full candidate for EU membership "under the best possible scenario and if everything goes according to plan" in 2009, Rehn confirmed Monday.