"Politically there are problems and these problems have actually got more difficult rather than less difficult, not least because there hasn't been much movement by China in respect of human rights," UK Foreign Secretary Jack Straw told ITV Television.

"And for their own reasons they decided to pass this new law authorising the use of force in the event of Taiwan seceding. So it's created quite a difficult political environment."

The EU is planning to end the ban imposed after the bloody crackdown on Tiananmen Square democracy protesters in 1989, hoping that the embargo's removal will improve Europe's ties with Beijing.

Code of conduct

The bloc has suggested a new "code of conduct" covering all EU arms exports, and a requirement on member states to tell each other what they are selling to China.

But Washington and Tokyo think the EU's new controls are too weak. Diplomats say Britain is caught in the middle.

China can resort to force now if
Taiwan declares independence

China passed a law on Monday granting itself the right to attack Taiwan if it moved to independence, days after unveiling a 12.6% rise in its defence budget to nearly $30 billion.

It denied either move meant it had Taiwan in its sights.

The United States, which is bound to defend Taiwan in the event of an attack, swiftly denounced the new law as "unfortunate".

Luxembourg, which holds the EU's rotating presidency, has pledged to reach agreement on arms sales by the end of June. EU heads of government meet in Brussels this week.

"It's not on the agenda of the European Council this week," Straw said. "At what stage the European Council ... judges that the time is right, remains to be seen."