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Brazil foreign minister sees EU-Mercosur trade accord this year

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    |By Anthony Boadle and Lisandra Paraguassu

By Anthony Boadle and Lisandra Paraguassu

BRASILIA (Reuters) - South American trade bloc Mercosur expects to sign a framework accord this year for a trade deal with the European Union as the U.S. shift to isolationism under President Donald Trump encourages it to look outside the hemisphere for opportunities, Brazil's top diplomat said on Tuesday.

Foreign Minister Aloysio Nunes told Reuters in an interview that Brazil and its neighbors in Mercosur, Argentina, Uruguay and Paraguay, have sped up long-running negotiations with the European Union and expect to have a political pact by year-end.

"The U.S. withdrawal from agreements like the Trans-Pacific Partnership (TPP) and the Atlantic Alliance undoubtedly opens new opportunities for us," Nunes said.

Free trade talks that have dragged on for over a decade between Mercosur and the European Union have suddenly come alive and negotiators hope to make significant breakthroughs next week in Buenos Aires, the minister said.

"There is an intensification of our talks with the EU and we are moving into a decision-making phase," Nunes said. "We will sign a wide political accord this year and later negotiate more delicate issues."

Brazil, an agricultural powerhouse, is looking to place more food exports in the dynamic markets of Asia, where China has displaced the United States as the top Brazilian trading partner with its purchases of soybeans and iron ore.

"This is a new area of Brazilian diplomacy," Nunes said, adding that a tour of seven Asian countries by Agriculture Minister Blairo Maggi in September had "successfully sowed the seeds" for new Brazilian sales.

Nunes, who was appointed two weeks ago, promoted closer ties to the United States as chairman of the Senate foreign relations committee, but his initial response to the election of Trump last year was very negative.

"Trump is the Republican Party on a drunken binge. He represents the worst of his party, the most uncontrolled and inflamed side," Nunes tweeted the day after the Nov. 8 vote.

Since then, Nunes said Trump appears to have moderated his stance and softened his position on immigration in his recent speech to Congress.

"Our relations with the United States are good and we want them to continue improving," Nunes said.

Brazilian President Michel Temer has spoken to Trump by telephone but there are no plans for a meeting, he said.

Temer's instructions to Nunes were to deepen Brazil's integration with other parts of the world by first starting in its own neighborhood, the Mercosur customs union.

"We need to turn Mercosur into a real free trade zone, which is what it was meant to be," Nunes said.

The four nations have identified 80 bureaucratic hurdles they plan to flatten so that goods can move across their borders as freely as people do today, he said.

The next step is to draw Mercosur closer to the Pacific Alliance countries, Chile, Peru, Colombia and Mexico, all of which have more open economies than Brazil and its partners.

Right-leaning governments took office in Brazil and Argentina last year ending the trade bloc's swing to populism and leading to the suspension of Venezuela because its left-wing government has failed to comply with the club's rules.

(Reporting by Anthony Boadle and Lisandra Paraguassú; editing by G Crosse and Diane Craft)