Officials in Brussels look set on Thursday to permit goods produced in the TRNC to be sent tax-free across the Green Line to the Greek Cypriot south - which joins the EU on 1 May.

Goods will then be distributed to the rest of the 25-nation bloc without restrictions or tariffs.

The proposed deal has to be ratified at a meeting of EU justice and interior ministers in Luxembourg on Thursday.

The decision is likely to be seen as a reward for Turkish Cypriots, who - despite voting last week to back a UN peace plan to reunify the divided island - will remain isolated.

In contrast, Greek Cypriots overwhelmingly rejected unity in a separate referendum.

No Greek Cypriot input

The proposed EU deal will mean that goods genuinely manufactured in northern Cyprus and "economically justified" can be exported tariff-free.

Trade would be regulated and authorised by the European Commission - not the Greek Cypriots authorities.

The EU already pledged to release almost €260 million in aid to help end the economic isolation of the breakaway Turkish Cypriot state, which is recognised only by Turkey.

Cyprus has been divided since 1974, when Turkish troops invaded the north following a Greek-backed coup in Nicosia.