MercoPress. South Atlantic News Agency

EU and Mercosur agree to re-launch trade talks next July

EU president Herman Van Rompuy made the official announcement

The European Union and the Latin American trade bloc Mercosur announced Monday that they were re-launching talks to create a free trade area of 800 million people. A tentative first meeting is scheduled for next July according to EU officials.

The talks are aimed at creating “one of the biggest free trade zones in the world,” European Commission President Jose Manuel Barroso said in an opening speech at the EU, Latin America and Caribbean leaders’ summit in the Spanish capital Madrid.

EU president Herman Van Rompuy described the project as having “tremendous economic potential.”

Negotiations have been stalled since 2004 because of differences over market access to the EU for Mercosur agriculture and for EU manufactured and services into Mercosur, which has four full members Brazil, Argentina, Uruguay and Paraguay and most of the rest of South America as associated members..

The re-launching of talks is opposed by France and nine other EU countries, which fear that Latin American meat imports would harm European farmers.

The association and cooperation agreement between the EU and Mercosur, which will also have a political dimension, will be “ambitious and balanced” said Spanish Prime Minister Jose Luis Rodriguez Zapatero, whose country holds the rotating EU presidency.

Barroso warned that the negotiations could only be concluded successfully if they were carried out “well” stressing that the “concerns of some sectors” needed to be heeded.

Argentine President Cristina Fernandez de Kirchner, whose country holds the Mercosur rotating presidency, criticized “protectionism,” saying that some European countries “fear for their subsidies.”

Latinamerican imports of beef, pork and chicken would cause European farmers annual losses worth 5 billion Euros claim European opponents to the deal.

The European Commission, on the other hand, argues the trade deal with Mercosur would generate annual benefits of 4.5 billion Euros for both sides of the Atlantic.

The talks will open in the first week of July said Van Rompuy while Spanish government sources indicated that a free trade area “could be consolidated within a decade”.

The summit was also expected to announce trade deals with Peru and Colombia, and possibly an association agreement with Central America.

Since the EU launched a “strategic partnership” with Latinamerica in 1999, the volume of trade between the two has doubled to nearly 180 billion euros in 2008.

Latin American and Caribbean countries accounted for over 6% of the EU total foreign trade in goods in 2009. The EU is the biggest investor in the region, and one of tree leading trade partners next to the United States and China.

The summit has brought some 60 European and Latin American leaders to Madrid.

German Chancellor Angela Merkel will only attend a dinner of the heads of state and government hosted by Spain's Crown Prince Felipe on Monday evening, German government sources said. Other expected absentees were Britain's David Cameron, Italy's Silvio Berlusconi, Venezuela's Hugo Chavez, Cuba's Raul Castro and Uruguay's Jose Mujica.