The European Union and Mercosur, the South American common market, will resume free-trade negotiations early this year, EU Economic and Monetary Affairs Commissioner Joaquin Almunia announced on December 16. The statement came the day before the commencement of the 34th Mercosur summit.

The EU and Mercosur started free-trade negotiations in 1999, but the talks stalled over disagreements on agricultural import restrictions. In order to revitalize the negotiations, Almunia signed a deal with Uruguayan Foreign Minister Reinaldo Gargano on the sidelines of the Mercosur summit. According to the deal, the EU will donate €50 million to the Latin American trade bloc in order to boost technical standards among Mercosur members and to promote Mercosur to the public.

Free-trade talks between the EU and Mercosur should resume early this year as both sides have pledged their commitment to reaching an interregional association agreement.

The EU is Mercosur’s largest trade partner, buying €36 billion in Mercosur exports in 2006. Establishment of a trade agreement between the two giant trade unions would create a gargantuan free-trade zone to rival the economic dominance of the United States.

As tensions between the United States and Mercosur associates like Venezuela grow, expect Mercosur to increasingly look to Europe as a trade partner.

Herbert W. Armstrong’s Plain Truth magazine forecasted in 1962, “[T]he United States is going to be left out in the cold as two gigantic trade blocs, Europe and Latin America, mesh together and begin calling the shots in world commerce.”

Expect relations between the EU and Mercosur to continue to improve and for the U.S. to become increasingly isolated on the world scene. For more information on Latin America’s future with the EU, read “Recolonizing Latin America?”