UPDATE 1-EU and Mercosur seek more time for trade proposals

Thu Dec 12, 2013 12:45pm EST

* Mercosur-EU trade pact would encompass 750 mln people

* Officials want to avoid repeat of 2004's collapse of talks (Recasts with European reaction, details)

BUENOS AIRES/BRUSSELS Dec 12 (Reuters) - Europe and South America are seeking more time to agree a free-trade pact and will extend a year-end deadline to say how far they are willing to go to open up their markets into early next year, officials said on Thursday.

The European Union and the South American trade bloc Mercosur had set themselves a deadline of Dec. 31 to outline the limits of the duty-free access they are willing to offer in markets ranging from beef to cars to create a pact that would encompass 750 million people and $130 billion in annual trade.

Mercosur's four members, Brazil, Argentina, Uruguay and Paraguay, were due to present their proposals to Brussels next week, but officials said all sides had agreed to take a little longer to ensure the offers were bold enough.

Argentine Cabinet chief Jorge Capitanich said on Thursday he had been surprised to learn that the European Union had asked to put off the exchange of market access offers for a month.

But the European Commission, which handles trade issues for the EU's 28 countries, said EU Trade Commissioner Karel de Gucht had discussed the issue with his Brazilian counterpart last week at the World Trade Organisation talks in Bali.

"Given the upcoming Christmas break, the commissioner suggested to proceed with the exchange in early 2014," said EU trade spokesman John Clancy. "There is no questioning that the commitment is there on both sides. We expect to be able to fix soon a date for such an exchange," he said.

Both Mercosur and the European Union are eager to avoid a repeat of 2004, when the offers made on both sides were considered too timid, failing to liberalise flows in trade and services and resulting in a collapse of talks.

Relations took years to recover and it was only in January at a summit in Chile that EU and South American leaders relaunched talks with an exchange of offers by the end of 2013.

The proposals involve lists of imports that each side would be prepared to liberalise in negotiations.

Brazil, Mercosur's largest economy, is hoping a free-trade agreement with the EU can be signed in 2014, 15 years after talks were first launched.

Attempts to negotiate a deal have stumbled over Mercosur access for European manufactured goods and EU access for Mercosur's agricultural products facing high EU farm subsidies.

Mercosur's newest member, Venezuela, has been left out of talks with Europe as it is not ready to compete. (Reporting by Anthony Boadle and Guido Nejamkis in Buenos Aires and Robin Emmott in Brussels; Editing by Alison Williams)

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