EU and Latin America plan booming common markets By SINIKKA TARVAINEN

ARTICLE (May 31 2010): As the European Union struggles to recover from the global crisis, it is increasingly looking to Latin America for new markets. An EU-Latin America summit that was held in Madrid on Tuesday raised high hopes of a better economic co-operation that could have "tremendous potential," according to EU president Herman Van Rompuy said.

Tough negotiations lay ahead, however, with European farmers preparing to put up fierce resistance against Latin American demands to flood their market with cheap meat imports. The EU agreed to relaunch stalled talks with the trade bloc Mercosur about a free trade area of nearly 800 million people, constituting one of the biggest free trade zones in the world.

A deal with Mercosur would improve EU access to the key Latin American markets of Brazil and Argentina, analysts said. Mercosur, whose gross domestic product (GDP) is the world's fifth-biggest, also includes Paraguay and Uruguay.

An EU-Mercosur free trade area would be so profitable that it would allow a country like Paraguay to boost its economic growth by 10 per cent, and the EU by 0.1 per cent, according to sources of the Spanish EUpresidency.

However, France and more than 10 other EU countries opposed the new talks, arguing that Mercosur meat imports would cost European producers 5 billion euros (6.3 billion dollars) annually.

Such objections have blocked a deal for a decade already, and both European and Latin American leaders warned that the negotiations would be tough.

Even if the Mercosur deal did not come through, however, the EU could find it increasingly difficult to regard Latin America as a fairly low priority, as it has done until now, Spanish analysts argued.

The continent is no longer regarded just as a politically unstable and impoverished "backyard of the United States."

Countries such as Chile and Brazil show signs of consolidating their democracies, and Latin America weathered the global crisis remarkably well, observers said.

Latin American countries took "rapid measures" against the crisis, Inter-American Development Bank President Luis Alberto Moreno said, predicting that the continent's GDP would grow more than four per cent this year.

"Latin America needs to become a developed region, without extreme poverty, and must be capable of creating opportunities,"Chilean President Sebastian Pinera said in an interview with the Madrid daily El Pais.

In Chile, per capita income was expected to rise to 22,000 dollars by 2018, which is higher than in some southern European countries, Pinera pointed out.

Together, the EU and Latin America make up an area of 1 billion people, accounting for more than a quarter of world trade, European Commission President Jose Manuel Barroso said.

The EU fears losing foothold to China and the United States in the Latin American market, where it is still the biggest investor and second-largest trading partner after the US.

Latin American and Caribbean countries accounted for just over six per cent of the EU's total external trade in goods in 2009.

In a sign of increasing mutual interest, the 27-nation bloc and six Central American countries announced a deal liberalising trade and lowering import tariffs on Tuesday.

The EU was also due to sign trade deals with Peru and Colombia in Madrid.

Those agreements were sealed in the framework of the EU's negotiations with the Andean Community, whose members are divided over whether free trade with the EU is really beneficial for them.

Ecuador would "never" want just a free trade deal, Foreign Minister Ricardo Patino said, insisting on an "integral" agreement allowing the country to "protect our development aims."

European and Latin American non-governmental organisations blasted the summit for allegedly only focusing on trade, instead of human rights or the environment.

The summit only aimed at opening markets for the EU and for big Latin American producers, said Grito de los Excluidos and Dreikoenigsaktion, two among several associations which issued a press release critical of the summit.

Colombia's free trade agreement with the EU will ruin 400,000 dairy farmers' families because of European milk imports, the Colombian leftist political alliance Polo Democratico complained.

Source: http://www.brecorder.com/index.php?id=1063234&currPageNo=1&query=&search=&term=&supDate=