Latin America, Europe open trade summit in Chile

SANTIAGO (AFP) - Leaders of crisis-hit Europe kicked off a two-day summit on Saturday with their counterparts from resource-rich Latin America, seeking closer trade ties but also assurances against protectionism.

Some 60 countries are represented at the meeting between the 27-member European Union and the Community of Latin American and Caribbean States, or CELAC.

Set up in Caracas in December 2011 at the behest of Venezuela, CELAC groups all nations from across the Americas except the United States and Canada and aims to boost regional trade and integration.

Chilean President Sebastian Pinera, the summit host, warmly welcomed his guests and called for a new "strategic alliance to achieve sustainable development." The EU is the biggest outside investor in Latin America, accounting for three percent of direct foreign investment in CELAC or US$385 billion (S$475 billion) in 2010.

EU officials noted that the figure exceeds the combined investment in China, Russia and India.

But European leaders made clear that closer trade ties depended on assurances that Latin America will shun protectionism and protect foreign investment.

"We need a strong political commitment to rein in protectionism and promote liberalization," European Commission President Jose Manuel Barroso told a meeting of business chiefs leaders shortly before the political summit's opening.

"It is fundamental to guarantee legal transparency and establish respect of international norms for investment." Powerful German Chancellor Angela Merkel, which the Chilean press has dubbed "Europe's boss," called for "cooperation without barriers to trade." "No one should think that the best manner to overcome the (economic) crisis is protectionism," she said.

The Europeans are keen on securing the speedy conclusion of a free trade pact between the EU and the South American trading bloc Mercosur.

Negotiations have so far stumbled over differences on agriculture - notably Europe's subsidies to its farmers, which undermine South America's efforts to sell its own products.

Dr Merkel warned that closer cooperation depended on "open markets, free trade and no protectionism." Argentine President Cristina Kirchner, who has taken some protectionist measures, said that the EU-Mercosur negotiations, launched in 2004, must restart on a "new basis" that can clear the way for a deal.

"The negotiations with the EU cannot be based on decisions made in 2004. We need new premises, first among all Mercosur members, not just between Brazil and Argentina," she said after a bilateral session with Rousseff.

Ms Kirchner suggested establishing an ad hoc Mercosur panel to come up with new proposals and make a new offer to the EU later this year.

French Prime Minister Jean-Marc Ayrault also called for "deeper and balanced" ties between the EU and CELAC.

Describing Latin America as "one of the engines of world growth," he expressed hope that the two regions will capitalise on their "complementarity." On Monday, the 33 CELAC leaders will hold their own summit here, with Cuba taking over the chairmanship from Chile for one year. They are hoping to overcome ideological and economic differences to foster greater regional integration.

The meeting will seal Cuba's full regional reintegration and mark a major diplomatic coup for President Raul Castro, whose communist-ruled country is still suffering from a crippling 50-year-old US trade embargo.

A parallel Summit of the Peoples got under way here Friday with a march of 1,000 leftists protesting capitalist economic policies.

The march turned violent when hooded demonstrators tore down traffic lights and shutters from shops in central Santiago, prompting police to intervene with water cannons and tear gas.

At least five protesters were arrested.

The two-day counter-summit brings together representatives of more than 400 social movements from across Latin America and Europe.