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EU, Latam to talk trade, boycott threat looms

Reuters | Sun May 16, 2010

EU, Latam to talk trade, boycott threat looms

Bate Felix

BRUSSELS (Reuters) - The European Union will seek to conclude trade agreements with several Latin American countries and revive stalled negotiations with others when 60 European and Latin America countries meet this week in Madrid.

The summit between European and Latin American heads of state, which takes place every two years, has been overshadowed by boycott threats from some South American countries over the participation of Honduran President Porfirio Lobo.

Many South American nations except Columbia and Peru, consider Lobo as illegitimate following his election in a vote organised by backers of a 2009 coup which deposed former president Manuel Zelaya.

However, Luiz Inacio Da Silva, leader of South America’s economic powerhouse Brazil, and Argentine President Cristina Fernandez de Kirchner are expected to attend. Venezuela’s Hugo Chavez said on Friday he was skipping the event, but gave no reason for the decision.

EU diplomats said the bloc would formally launch a Latin American Investment Facility worth about 225 million euros (191.6 million pounds), to leverage investment on projects in the region.

The financial instrument is tailored like the EU’s investment facility for its eastern neighbours, which through grants of 71 million euros, supports projects worth around 2.7 billion euros.


The 27-nation European Union and the Mercosur group made up of Argentina, Brazil, Paraguay and Uruguay plan to formally revive stalled trade negotiations begun more than a decade ago, which were suspended in 2004 over differences.

Mercosur countries said then that they were not satisfied with the EU’s agricultural market access offer, while the EU complained about the lack of proposals from the Mercosur group to open its telecoms market and to protect EU industries.

EU diplomats said the bloc would pursue a trade deal with the Mercosur group despite concerns on the part of France and some other EU states that this could harm their agricultural sectors.

"Mercosur is an important economic bloc, protected, emerging and has potentially many economic values for the EU and does not have a free trade agreement with any other country," an EU diplomat said.

"The negotiations will be very difficult, this is very clear. Mercosur is one of the most competitive agricultural producers in the world and very competitive on products that we produce in Europe."

Slow progress of the Doha round of world trade talks has pushed Brussels to seek regional trade agreements. The EU is also seeking to counter China’s expansion into a region that is expected to grow by between 4.0 to 4.5 percent this year.

Apart from the Mercosur deal, the EU is hoping to sign an agreement with Columbia and Peru, and conclude another trade deal with Central American states.

Negotiations between the EU and Panama, Guatemala, Costa Rica, El Salvador, Honduras and Nicaragua collapsed last week after the parties failed to agree on a number of issues, including imports of dairy products.

Diplomats said the parties were meeting this weekend and hoped to have an agreement before the summit on Tuesday.

(Editing by David Brunnstrom and Paul Casciato)

 source: Reuters