P&O Ferries Chairman Lord Sterling on Radio 4's Today programme: "Ferry routes will close"

He intends to use the first summit debate - on economy and employment - to point out that thousands of jobs will be lost if the duty-free trade on cross-border EU air and sea journeys is scrapped on 30 June, 1999.

Six member states have already indicated they are happy to consider a reprieve for the popular concession on goods such as cigarettes and alcohol - with more signalling readiness to agree to a review following pressure from Britain.

Foreign Secretary Robin Cook has admitted the issue is high on the British agenda.

It also gives Mr Blair an issue on which he can display solidarity with France and Germany at a time when the two countries are squeezing Britain over tax harmonisation, the UK's EU budget rebate and the extension of majority voting.

Duty-free is popular with the public, but not the European Commission

Five member states - Germany, France, Spain, Portugal and Ireland - are firmly behind Mr Blair in re-opening the duty-free debate.

Sweden - previously one of the countries most determined to see duty-free sales scrapped - is said to be about to agree at least to commission a new study into the impact.

Mr Blair wants sufficient backing on Friday to instruct EU finance ministers to launch a new study into the impact of ending Europe's annual £5bn duty-free trade.

He told BBC Radio 4's Today programme: "You cannot introduce a scheme abolishing duty-free in circumstances where the successor regime is going to create enormous problems.

"A campaign that was impossible is now possible. It's not yet probable, but we've got a lot more support for it than we might have thought.

"I think it is going our way but it requires unanimity to get it changed. So that's a pretty tall order and that's why I don't give any promises or guarantees to people."

The unanimous decision to scrap duty-free sales was taken in 1991. EU governments agreed that the retention of the tax concession was an anomaly in the single European market.

The end of duty-free was delayed for seven years to give the industry time to adjust. However, six months before the deadline, a rearguard action is underway in an attempt to save the business.

France and Germany want a five-year stay of execution at least, while the claims of duty-free campaigners are studied.

They say scrapping duty-free will cost thousands of jobs, particularly at British channel ports, on ferries and among airline staff.

The European Commission has pointed out only a unanimous decision of governments can reverse the original decision.

Duty-free 'should go'

Stewart Neames of Neames Brewery on Radio 4's Today programme: Duty-free subsidises ferry companies

Retaining duty-free may be popular with the public, but Eurocommerce, the body which represents the EU interests of retail and wholesale traders, said it should go even if jobs are at stake.

The biggest obstacle is the commission's Tax Commissioner Mario Monti, who firmly believes duty-free sales have no place in a border-free Europe.