EU-Latin America summit opens with trade deal

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The European Union and Central American nations reached their first free trade deal on Tuesday as the EU opened a summit with Latin American leaders focused on expanding economic ties.

"In an increasingly globalised world where the source of prosperity lies in uniting efforts, the capacity for economic growth lies in openness and liberalisation" and not in protectionism and closed borders, Spanish Prime Minister Jose Luis Rodriguez Zapatero told the Madrid summit.

EU president Herman van Rompuy told the heads of state and government that the two regions have seen an "increasing convergence of interests and values.

"EU and Latin America are natural partners and allies. Our countries are linked by strong historical, cultural and economic ties."

Spain, which has close ties with its former colonies in Latin America, hopes the summit will be a high point of its six-month presidency of the European Union, which it holds through June.

Hours before the conference formally opened, the EU reached the first ever free trade deal with the Central American nations of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

"The EU and Central America ... have finalised the negotiations on the trade pillar of the Association Agreement," both sides said in a statement.

"The trade ministers of Central America and the EU express their full satisfaction with the outcome, which will result in an ambitious, comprehensive and balanced trade pillar of the Association Agreement."

The negotiations are to be formally concluded by EU and Central American leaders at their summit meeting on Wednesday.

The deal envisages "100 percent market opening for industrial products on both sides" and export quotas for milk powder and cheese from Europe and for bananas, beef and rice from Central America, according to the European Commission.

European motor vehicles will also be given "free access to the Central American market over a period of 10 years."

Salvado's cabinet secretary Alexander Segovia said the EU's "flexibility" led to the deal.

"There was a show of flexibility by the European Union and with that we managed to get to an agreement," El Salvador television quoted him as saying from Madrid.

The six Central American countries have been in talks on a free trade deal with the European Union since 2007.

The announcement follows an agreement late Monday between the EU and the South American trading bloc Mercosur to resume talks aimed at reaching a free trade deal, despite opposition from a number of European nations led by France.

The EU and Mercosur, which is made up of Argentina, Brazil, Uruguay and Paraguay, began free trade talks in 1999 but they stalled in 2004 due to disagreement over tariffs and subsidies paid to European farmers.

Zapatero said a free trade agreement between the two blocs would lead to an extra five billion euros (6.2 billion dollars) in exports per year.

Last week, 10 EU nations issued a statement opposing the resumption of the talks with Mercosur because "the strategic agricultural interests of the European Union are clearly at stake."

The statement was backed by Austria, Cyprus, Finland, France, Greece, Hungary, Ireland, Luxembourg, Poland, and Romania.

France is the main beneficiary of the EU's Common Agricultural Policy, which pays billions of euros each year in subsidies for food production.

Peruvian President Alan Garcia, whose country hosted the last EU-Latin America summit in 2008, welcomed "the opening of a difficult dialogue" between the EU and Mercosur at a time when "the world and Europe is being shaken by crisis."

Argentine President Cristina Kirchner also warned the negotiations would be "difficult" due to "protectionist" tendencies of some European nations.

Other leaders attending the summit include French President Nicolas Sarkozy, Brazilian President Luiz Inacio Lula da Silva and Bolivia's Evo Morales.

© 2010 AFP

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