The EU is fighting for economic recovery after the shocks it received from the Greek debt crisis, the resulting pressures on the euro and draining of resources. The community is in urgent need of new markets to stimulate exports.

Last week the EU and South Korea signed a free trade agreement that is set to generate about $25 billion in export revenues for EU producers. Combined EU-South Korea trade in goods topped $70 billion in 2009.

In contrast, EU sees the potential of trading with Mercosur's enormous market, currently estimated to have a gross domestic product of $1.7 trillion. The EU has staked about $214 billion in investments in the Mercosur region, more than in any one member of the BRIC group -- Brazil, Russia, India and China.

EU faced resistance while negotiating the deal with South Korea, mainly with Italy, a direct rival to the East Asian country in the low-price car market. EU faces tougher hurdles while finalizing a Mercosur deal because of stiff opposition from farmer lobbies backed by France and other EU member countries.

EU Trade Commissioner Karel De Gucht said he now felt confident a Mercosur deal could be reached within "a reasonable time span, ideally before the next summer holidays (July 2011)."

The EU and Mercosur have been talking on and off about a free trade agreement for 15 years. EU partners resisted the deal for fear cheaper Latin American commodities and agricultural produce would hurt European farmers and producers. As Latin American economies grew EU exporters' perception of the region changed, too, with renewed interest in Mercosur's market potential.

Both sides see a free trade agreement as the key to speeding economic recovery and boosting growth.

Moves to resume Mercosur-EU trade talks began in May under the Spanish presidency as European and Latin American leaders gathered there for a summit conference. After the initial accord in Madrid, the first round of EU-Latin American talks took place in Buenos Aires in June but was marred by bilateral disputes over Argentine attempts to block EU exports.

The next round of EU-Mercosur talks is due to be held in Brussels in October. EU officials said they would seek tentative accords on key issues before a possible deal next year.

earlier related report
Lula's press-bashing set to tarnish image
Rio De Janeiro (UPI) Sep 23, 2010 -Brazilian President Luiz Inacio Lula da Silva put his "father figure" reputation on line in an unusually harsh criticism of the media, which has been looking into alleged corruption and irregularities attributed to the ruling Workers Party aides.

Lula da Silva upbraided the media after controversy broke over reports implicating the party's presidential candidate, Dilma Rousseff, in an alleged scheme to peddle government influence for cash.

Rousseff denied any knowledge of alleged cash-for-favors deals linked to Erenice Guerra, who took over as the presidential chief of staff, a senior Cabinet position, Rousseff entered the race for the Oct. 3 election.

Lula's response was tougher and more defiant. He pointedly condemned the media for seeking out only the negative reports about his presidency, his aides and Brazil in general. He accused the media of fomenting hatred and being interested only in failures of his government.

Lula's administration has faced corruption charges, none proven, since the first term of his presidency but has repeatedly won the Brazilian public over because of his personal charisma.

Ahead of his departure from office at the end of the second term, Lula has fostered the image of himself as Brazil's father figure, almost the founder of modern Brazil. A combination of a global boom in commodity prices, huge oil discoveries and Lula's support for a carefully cultivated image of a modern reformer have elevated Lula to a position where direct attacks on him are rare but scrutiny of his aides is a regular occupation for journalists.

As Lula nears the end of his second term and the election campaign heats up, the media is feeling emboldened to resume attempts at exposure of aides who are suspected of irregularities.

Rousseff said she was unaware of any wrongdoing by Guerra, who stepped down as reports grew in intensity. "So far I have not seen any evidence, any corrupt act of former minister Erenice, which does not mean that she is above any suspicions," she said in a television interview.

Guerra took over as the chief of staff in March after Rousseff left to launch her presidential campaign. She decided to step down last week after two separate of accusations of influence-peddling.

Rousseff called for a thorough investigation, saying that "everything must be rigorously investigated, no matter who gets hurt." But she emphasized the controversy over Guerra's actions has nothing to do with her presidential election campaign.

Lula told a political rally that Rousseff's victory in the polls would also be a victory against the critical media. Besides defeating political opponents "we are going to beat some newspapers and magazines that behave as if they were a political party."

His comment received poor reception. Brazilian Solicitors College President Ophir Cavalcanti said Lula da Silva "is showing certain intolerance toward a constitutional principle which is essential for the strengthening of democracy: freedom of expression."

The Newspapers Association in a statement said it found it "regrettable and worrisome" that "toward the end of his two mandates should express such disregard toward the role of the press in democratic societies."

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