The relaunch of trade talks between the European Union (EU) and the Mercosur group of four South American countries has been welcomed by European retailers and importers.

The talks, which resumed on Monday (17 May) and will begin with a first round of negotiations in July, are aimed at creating the world's largest trading bloc between the four Mercosur countries (Brazil, Argentina, Paraguay and Uruguay) and the EU's 27 member states.

The potential free trade zone offers "an important opportunity for the EU to support European companies investing abroad and seeking closer trade ties with Latin America," according to the Foreign Trade Association, which represents European retailers and importers in international trade issues.

The EU is not only Mercosur's largest trading partner, but also the largest investor in the region, with EUR167.2bn (US$203.5bn) invested in 2008.

Many European retailers are active in Brazil and Argentina and export considerable quantities of manufactured goods to Mercosur.

Interest in creating the free trade zone with a combined population of about 270m people has grown since the start of the financial crisis and delays to the Doha round of world trade talks.

"As we look to strengthen the global economy after the downturn, a successful outcome can offer real benefits in terms of jobs and growth for both sides," said European Commission president José Manuel Barroso.

However, while Mercosur is an increasingly important area of expansion for European retailers, the FTA warns the market has become increasingly protected during the economic crisis, with Brazil and Argentina both raising existing tariff and non tariff barriers.

It also notes that from October 2008, Argentina has progressively expanded the use of non automatic licenses for a large number of sectors including footwear, textiles and clothing.

Reference prices have been introduced for textiles and footwear, and tariffs on textiles and footwear have been increased along with all controls procedures.

The EU first began free trade negotiations with Mercosur in 1995. These were suspended without agreement in 2004.