Page last updated at 13:16 GMT, Monday, 17 May 2010 14:16 UK

EU seeks trade breakthrough with Latin America

By Laurence Peter
BBC News

Soybean production in Perez Millan, Argentina - file pic
Soya is among Latin America's biggest exports to the EU

The EU is to seek to revive stalled trade talks with Latin America at a summit in Madrid.

France and some other EU member states fear that a deal with South America's Mercosur trade bloc could hurt their farmers at a time of economic hardship.

A senior EU official said many EU and Mercosur products - industrial and agricultural - were so similar that there were big competition issues.

Argentina is an especially difficult market for EU farmers, he told the BBC.

The Mercosur group embraces Argentina, Brazil, Paraguay and Uruguay. Their negotiations with the EU were suspended in 2004.

Despite these difficulties, the EU is Latin America's second biggest trading partner and the biggest investor in the region.

In 2000-2009 the EU's exports to Latin America and the Caribbean (LAC) grew from 59bn euro (£50bn; $73bn) to 66bn, while imports grew from 54bn to 74bn, official EU data shows. Just over 6% of all the EU's external goods trade is with the LAC.

Market opportunities

The EU says it is backing Mexico's negotiations aimed at securing a binding global agreement on combating climate change. Mexico will host the next big conference on climate change, in Cancun in November-December.

Spanish PM Jose Luis Rodriguez Zapatero (left) and Chilean President Sebastian Pinera in Madrid, 17 May 10
Spain's PM Zapatero (left) is steering the EU's negotiations in Madrid

Spain is keen to make progress with the LAC leaders in Madrid, as the current holder of the EU presidency and historically the dominant European power in the region.

EU-LAC summits take place every two years.

The Spanish Prime Minister, Jose Luis Rodriguez Zapatero, said that despite the economic crisis hitting his country he saw favourable conditions for Spanish firms to boost investment in Chile.

European telecom firms and banks are leaders in EU commerce with Latin America.

Peru's President Alan Garcia said Europe "has better chances to tap into Latin American growth harmoniously than with any other region of the world".

The EU hopes to sign free trade deals with Colombia and Peru, and conclude another trade agreement with Central American countries.

Notable absentees

Most Latin American leaders are expected at the summit, despite the threat of a boycott over the invitation extended to the Honduran President, Porfirio Lobo.

Mr Lobo, who came to power after the military overthrew his predecessor, will not now attend the summit.

The Venezuelan President, Hugo Chavez, will also miss the summit, as will Italy's Prime Minister Silvio Berlusconi and UK Prime Minister David Cameron.

In 2009 machinery and vehicles accounted for almost half of EU exports to the LAC, while food and drink accounted for a third of imports.

The main EU exports were medicine, ships, aircraft, cars, vehicle components and petrol, while the main imports were soya beans and their residues, crude oil, coffee, bananas and copper.

Germany was by far the largest exporter to the LAC countries in 2009, at 18.5bn euro, or 28% of the total, followed by Italy (8.7 bn or 13%), France and Spain.

Brazil was the leading destination for EU exports - 21.6bn euro, or 33% of the total, followed by Mexico.

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