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Argentina-Brazil patch up on trade, look to Europe deal

Brazil's President Dilma Rousseff (R) shakes hands with her Argentinean counterpart Cristina Fernandez de Kirchner during a meeting in Santi
Brazil's President Dilma Rousseff (R) shakes hands with her Argentinean counterpart Cristina Fernandez de Kirchner during a meeting in Santi

By Guido Nejamkis

BUENOS AIRES (Reuters) - Argentina's recent Cabinet shuffle has smoothed trade friction between South America's two largest economies and clears the way for a united proposal for free trade with the European Union, Brazilian Trade Minister Fernando Pimentel said on Thursday.

Cash-strapped Argentina, one of the most protectionist members of the Group of 20 countries, has been restricting Brazilian imports since last year even though both are members of the Mercosur customs union.

Argentina has agreed to let in Brazilian goods that were stopped at the border, mainly cars and shoes, Pimentel said after meeting with Argentina's new Cabinet chief, Jorge Capitanich, and Economy Minister Axel Kicillof.

"This issue that was upsetting our exporters has been resolved," Pimentel told reporters. "There's been a change of team and we think that is positive."

The appointment last month of Capitanich, a former provincial governor, has been seen as a pragmatic shift in the government of President Cristina Fernandez as it strives to restore business confidence shaken by her policies and the nationalization of Spanish oil major Repsol last year.

Shut out of financial markets since a massive default a decade ago, the Argentine government introduced import restrictions to improve its trade balance and generate needed foreign currency.

While Brazil and two smaller members of Mercosur - Uruguay and Paraguay - are ready to present their offers for the negotiation of a free-trade accord with the EU, Argentina's involvement has been in doubt due to its policies to protect local industry.

But Pimentel said Argentina was on board and a joint Mercosur offer will be presented to Brussels on December 18 or 19, after officials from the four Mercosur nations give it the final touches next week at a "decisive" meeting in Rio.

Attempts to negotiate a free-trade deal have not succeeded in a decade and a half, stumbling over Mercosur access for European manufactured goods and EU access for Mercosur's agricultural products facing high European farm subsidies.

Mercosur's newest member, Venezuela, will be at the meeting but will be left out of negotiations with Europe as it is not ready to compete.

"We will have our offer ready by next week" Pimentel said, with President Dilma Rousseff's foreign affairs adviser Marco Aurelio Garcia at his side. "Argentina has an offer and will present it. That's clear now."

(Writing by Anthony Boadle; Editing by Bill Trott)

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