The European Union says it is ready to lift its decade old embargo against Zimbabwe if the country holds a 'credible' referendum on the constitution next month.
President Robert Mugabe and his coalition government partners early this month reached an agreement on the proposed new constitution paving the way for the referendum.
The EU partially eased the sanctions in February last year by removing a visa ban and asset freeze on 51 of the targeted 150 people and 20 of 30 companies on the sanctions list.
The block maintained sanctions against Mugabe and most senior members of his inner circle as well as top officials in his Zanu PF party.
According to a report in the state run Herald Monday, EU head of delegation to Zimbabwe Ambassador Aldo Dell' Ariccia said only "a peaceful and credible constitutional referendum would justify a suspension of the majority of all restrictive measures."
"In this context, the recent agreement on the constitution draft is a welcome step in that direction," he said.
However, human rights groups claim that the southern African country has failed to make key reforms needed to ensure a free and fair election.
"To hold credible, free, and fair elections in 2013, Zimbabwe's government needs to level the political playing field and create a rights-respecting environment now," Daniel Bekele, Africa director at the United States based Human Rights Watch said recently.
"This means amending repressive laws and replacing partisan police chiefs and election officials with impartial professionals."
Zimbabwe exports ferro-chromium, raw cane sugar, non-industrial and industrial diamonds; copper (refined), raw hides, citrus, cut flowers and vegetables to the EU.
But the trade has been declining because of the embargo imposed in 2002 because of alleged electoral fraud by Mugabe.
"The total trade between Zimbabwe and the EU shows a decrease of 9, 8% in 2012 from the previous year with a decrease on the Zimbabwean exports to the EU of 16,47% and a slight increase of the imports from the EU of 2,54%," Dell'Ariccia said recently.