Talks on an ambitious trade pact between the European Union and South American customs bloc Mercosur stalled this evening when no progress was made on the issue of market access, EU officials said.
The two sides exchanged detailed proposals in May for an agreement which could spark a strong increase in the $40 billion a year in trade among the 29 nations in the two regions. But neither side is satisfied with the other's offer.
"We have interrupted the talks at the level of chief negotiators," European Commission trade spokeswoman Ms Arancha Gonzalez said after the latest session in Brussels.
"It was not possible to advance on market access, whether on industrial production, on services or on public procurement and therefore we now need to bring this to the attention of ministers," she said, adding the talks would carry on only at technical level.
Ms Gonzalez said chief negotiators would resume talks in the second week of August in Brazil and that the EU and Mercosur ministers in the meantime would be in touch to discuss the situation.
The setback came as the world's major trading powers are wrestling to reach a deal to salvage stalled global trade liberalisation negotiations before an end-of-July deadline in the World Trade Organisation.
Officials said the Mercosur countries - Argentina, Brazil, Paraguay and Uruguay - wanted the EU to allow greater access to their exports of farm products before offering the EU greater access to services and investment in the South American bloc.
Mercosur exports agricultural products worth more than €12 billion a year to EU markets.
However, the EU insists on concessions in sectors such as banking, telecoms, maritime transport and public tenders before it will improve its agriculture offer, the officials said.