* EU leaders in Chile to deepen trade, mend ties with
* EU, Latin American leaders to issue expression of unity
* Deal with Mercosur trade bloc is biggest prize
By Robin Emmott and Alejandro Lifschitz
SANTIAGO, Jan 25 Spain told Latin America on
Friday to respect its investments after Argentina and Bolivia
nationalized three companies last year, but it trod carefully
before a summit where the EU will seek to boost trade with the
Europe needs Latin America more than ever to help it recover
from a deep banking and debt crisis that has driven many of its
economies, including Spain, into recession.
Still, a split between the open economies of Mexico and
Chile and more protectionist Argentina and Brazil is
complicating European Union efforts to foment economic growth
through trade deals and investment.
"Spain is ready to try to understand everyone's positions,
but the government ... and its companies also have the right to
be respected," Spanish Prime Minister Mariano Rajoy told
reporters in Santiago before the weekend summit.
Argentine President Cristina Fernandez seized control of oil
company YPF from its parent, Spain's Repsol,
last year and tensions have been worsened by disputes over
sweeping import curbs that are now at the World Trade
Bolivian President Evo Morales nationalised two power
companies owned by Spanish utility Iberdrola in
But with trade flows between Latin America and the European
Union more than doubling over the past decade, EU leaders and
their Latin American counterparts will seek to show unity in
their final statement to be delivered on Sunday evening,
according to a draft seen by Reuters.
The final statement agrees on the need to welcome foreign
investment and commit to more open trade.
"We firmly reject all coercive measures of unilateral
character that are contrary to international law and the
commonly accepted rules of free trade," the leaders meeting in
Santiago will say, according to the draft.
"We agree this type of practice poses a serious threat to
multilateralism," the draft said.
Europe is the top foreign investor in Latin America and
Rajoy called on companies from Mexico to Uruguay to invest in
Spain as it struggles with record unemployment and one in every
two young Spaniards cannot find work.
The greatest prize for the European Union would be a
free-trade deal with commodities-exporting giants Brazil and
Argentina, which are part of the South American Mercosur bloc.
An accord would encompass 750 million people and $130
billion of annual trade, helping European exporters,
particularly of cars, machinery and luxury goods. Advocates say
it might also spur economic growth in South America, where many
components and input goods for Europe are produced.
EU diplomats in Santiago say European leaders, including
Rajoy and German Chancellor Angela Merkel, will make a renewed
push for momentum on Mercosur at the summit.
But the talks, which first started almost 20 years ago, were
already relaunched in 2010 to little effect and have run into a
host of problems over the years, from Brazilian import tariffs
driven by a strong real, to European farm subsidies that make it
harder for Mercosur to export there.
Global Trade Alert, an independent body monitoring global
trade, says Brazil is one of the 10 most protectionist countries
in the world. It has moved to block a surge of imports driven by
its strong real currency ranging from Finnish steel to Chilean
Europe could choose to deepen its links with others,
including the faster-growing economies of the Pacific, including
Peru, Mexico and Chile. However, Alicia Barcena, head of the
U.N.'s regional economic body ECLAC warned against such a
Pacific nations "cannot go behind Mercosur and Brazil's
back," Barcena said. "It is important to avoid a division."