In World Cup year, Europe offers Brazil longer-term goal

Wed Dec 4, 2013 6:30am EST
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By Robin Emmott and Alonso Soto

BRUSSELS/BRASILIA (Reuters) - While much of Brazil is focused on hosting next year's soccer World Cup and the Olympic Games in 2016, an event of far longer-lasting economic significance is bubbling below the surface.

If all goes to plan, Brazil will sign its first major free-trade agreement next year, 15 years after talks were first launched with Europe on an ambitious deal. Such pacts can bring sustainable wealth while sporting events tend to engender only short-term and sometimes money-losing prestige.

But success or failure for Brazil relies on dealing with an unpredictable partner, Argentina.

The European Union and the South American trade bloc Mercosur have set themselves a deadline of December 31 to swap offers for opening markets in a pact that would encompass 750 million people and $130 billion in annual trade.

A final accord could be struck early next year. But negotiators also know that over more than a decade, talks have collapsed and been relaunched only to stall again, while in between, Argentina suffered the world's largest debt default.

"We still hope we can agree a deal," said Adrianus Koetsenruijter, a senior EU official who deals with Mercosur, which comprises Brazil, Argentina, Paraguay, Venezuela and Uruguay.

For the European bloc, the deal would let it tap into Latin America's promising economies and boost its global trade role.

But the question is whether Argentina, one of the most protectionist members of the Group of 20 countries, will join in opening its economy to greater EU imports, or go the way of Venezuela's leftist government, which is out of the talks.   Continued...

A view is seen of the ongoing construction of the Arena da Amazonas Stadium, with the Amazon River in the background in Manaus, October 7, 2013. REUTERS/Bruno Kelly