MercoPress. South Atlantic News Agency

Lula announces China-Mercosur talks.

Brazilian president Luiz Inacio Lula da Silva announced that Mercosur and China would begin in the near future talks to reach a free trade agreement.

Mr. Lula da Silva currently on an official visit to China said in the University of Beijing that private sector talks would begin next July when Argentine president Nestor Kirchner and a Mercosur business delegation visit China.

The first step will be to agree on a partial list of goods subject to tariff preferences.

However Mr. Lula admitted that one of the main obstacles was Paraguay, one of Mercosur's full members which is also one of 26 countries in the world that has full diplomatic relations with Taiwan.

During his speech to Beijing University students President Lula underlined the significance of a "strategic alliance" between China and Brazil, and the promising association in fields such as uranium, hydrocarbons and software.

Actually China and Brazil are exploring mechanisms for the implementation of a wide cooperation in nuclear energy. Brazil is determined to obtain self sufficiency in the production of industrial enriched uranium for peaceful purposes since the country is planning to increase the number of nuclear electricity generating plants.

"The strength and vitality of the Chinese economy is a unique opportunity for growth and cooperation with the countries of the Southern hemisphere, and I'm sure China has that clear perception about the Brazilian economy", stressed President Lula da Silva.

But not all Brazilian businessmen are so convinced given the competitiveness of the Chinese economy and Brazilian Foreign Secretary Celso Amorim indicated that the process will be gradual beginning with a tariff preferences system before engaging in free market talks.

President Lula da Silva also talked about foreign policy underlining that a solid bilateral relation with China would be a very useful contribution for addressing global multilateral challenges and strengthening the United Nations.

Brazil's priorities are close relations with its South American neighbours and particularly with Argentina which is the "axis on which we are developing this policy", revealed Mr. Lula da Silva.