Spain, Brazil want EU-Mercosur deal, worry about Venezuela

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Brazil's president Michel Temer (R) speaks with Spanish Prime Minister Mariano Rajoy during a meeting at the Planalto Palace in Brasilia

Brazil's president Michel Temer (R) speaks with Spanish Prime Minister Mariano Rajoy during a meeting at the Planalto Palace in Brasilia, Brazil April 24, 2017. REUTERS/Ueslei Marcelino

BRASILIA (Reuters) - The governments of Spain and Brazil on Monday reinforced their commitment to completing a trade pact between the European Union and South American trade bloc Mercosur despite protectionist sentiments.

On a two-day visit to Brazil, Spanish Prime Minister Mariano Rajoy said he agreed with Brazilian President Michel Temer about the need to wrap up a trade deal that has taken more than 15 years to negotiate.

Rajoy also called for elections as the only way to reach a negotiated solution to the political crisis in Venezuela, expressing "deep concern" over the volatile situation in the neighbouring country.

"We agree that given the degree of confrontation and the volatility of the situation, a negotiated solution is needed, and it must inevitably involve giving back to the Venezuelan people their voice," he said.

Rajoy is heading a large delegation of Spanish businessmen who are looking for investment opportunities in Brazilian banking, energy, water and infrastructure sectors.

Brazil is the third-most important market for Spanish investors, who account for the second largest stock of foreign investment in the South American nation after the United States.

Spain is one of the strongest backers of an accord to lower trade barriers between the European Union and Mercosur members Brazil, Argentina, Uruguay and Paraguay. Negotiations have been delayed for years by the reluctance of European farmers and Mercosur manufacturers to face competition.

"Spain has always been and will continue to be a firm supporter of the agreement," Rajoy said after meeting Temer.

"In these moments in which some feel protectionist temptations, we both agree on the importance of free trade."

Argentine Foreign Minister Susana Malcorra, who is hoping to clinch the EU-Mercosur deal by the end of the year, said external reasons would help advance it.

Malcorra said the retreat of the United States from trade talks had opened a window for the European Union to become a strong player in multilateral, region-to-region accords.

"Our view is that (the EU-Mercosur accord) is not only an economic agreement," she said in Geneva on Monday. "It's more than that, a political agreement."

(Reporting by Anthony Boadle and Alonso Soto; additional reporting by Tom Miles in Geneva and Jesus Aguado in Madrid; Editing by Lisa Von Ahn)

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