The Taoiseach warned against too much optimism about the indefinite retention of duty-free.

Mr Ahern said he believed the best that could be achieved was an extension on the phasing out of the scheme, which is scheduled for June of next year.

"Overturning the EU Commission's decision completely has been off the agenda."

He added that the Commission did not see the retention of duty-free as a long-term concept.

"Their concept is that border taxes are a direct affront to the single market."

Mr Ahern said the UK was now supporting the Irish campaign for the retention of duty free sales, following the visit of the British Prime Minister, Mr Tony Blair, last week.

He said that the issue would be discussed informally at the Vienna summit in 10 days' time, and it was now a priority to lobby the Nordic countries.

It was encouraging that both France and Germany had now come on board on the issue, Mr Ahern added.