European and Latin American political leaders vowed Monday to finish free trade negotiations between the two continents by the end of the year - but gave no signals on how they plan to break the present deadlock, according to Dow Jones newswires.



The new informal deadline would see talks completed earlier than expected. Since they missed a deadline last October, most analysts had expected the two sides to wait until after the latest global trade negotiations are signed, which could take place in 2006 at the earliest.



But Brazilian Trade Minister Luiz F. Furlan said European Union Commission President Jose Manuel Barroso had assured him at a lunch during the World Economic Forum that the talks remain a priority, and an early completion remained possible.



Karl Falkenberg, the EU's chief negotiator, agreed, saying that with "all the political will I have heard in Davos and here, I am sure we will have an agreement by the end of this year."



When the talks were launched five years ago to forge the world's biggest free-trade area, it looked like an ideal fit. Argentina and Brazil envisioned a boom in meat and sugar exports to the other side of the Atlantic. Europe swooned at the thought of the burgeoning middle class of Brazil buying up European phones and cars. And Europe was eager to beat the U.S. in sealing a deal with the South Americans.



But the talks are in crisis. At last year's talks, Mercosur - which is led by Brazil and Argentina but also includes Paraguay and Uruguay - cut a previous offer on the ceiling of European industrial exports. The EU responded by slashing Mercosur's planned access to Europe's beef and poultry markets.



For the Europeans, Brazil's domination within Mercosur and its insistance on opening up European markets to its agricultural goods remain a prime obstacle. EU negotiator Falkenberg complained about "the Mercosur method," which allows the "smallest denominator" to block progress. In particular, European diplomats have complained about how frictions between the small countries and giant Brazil have made it hard to nail down Latin American positions on sensitive issues.



For the Latin Americans, the problem instead is Europe's inability to cut its farm subsidies. Chief Brazilian negotiator Regis Arslanian highlighted the importance of agriculture as almost "everything," complaining that the EU wants to open its market far less than demanded.



"With a 50 percent offer in agriculture, there will not be a free-trade agreement", he warned. "Basic agricultural products must be included to the offer."



Nor is Latin America at the forefront of European concerns. EU Industry Commissioner Gunter Verheugen warned that Mercosur is competing with China and India as a potential trade partner.



For Brazil, too, the priority may not be trade with Europe, but with Asia - and at home. "Brazil is very interested in physical integration of South America," said Trade Minister Furlan, explaining that his country is helping the neighbors to build more infrastructure, such as a project to build a road linking Brazil to two Peruvian Pacific ports.