European and Latin American negotiators say they are edging toward accord on what they say will be a balanced free trade pact that can keep them out of political trouble and reassure EU farmers fearful of competitive South American exports.

The now-on and now-off Mercosur-EU trade pact negotiation is increasingly seen in cash-strapped Europe as an urgent necessity while in the past it was dismissed as a Latin American strategy to flood European markets with cheap produce.

Europe, assailed by the eurozone crisis, is extra keen to clinch a Mercosur deal that will open Latin America to its exports of goods, technology and services. The EU is the main foreign investor in the region but wants to add value to its investments and draw more benefits from the Latin American markets.

The Mercosur region covers more than 267 million Latin Americans and commands a gross domestic product of $2.9 trillion.

EU High Representative for Foreign Affairs Catherine Ashton said the European Union saw its relations with Latin America as "strategic" and backed closer political dialogue. Ashton attended the latest session in Brussels of a European-Latin American Parliamentary Assembly.

EuroLat Co-president Jose Ignacio Salafranca, a Spanish member of the European Parliament, warned that Europe could lose to China its privileged position as the region's main trade partner unless more was done to secure Europe's current advantage.

European states hope a Mercosur accord can be in place or at least in an advanced stage of negotiation before the next European-Latin American summit, due to be held in Santiago, Chile, next year.

A growing awareness in Europe that Latin America offers lucrative opportunities has driven EU leaders to pursue more vigorously talks toward an early trade pact.

However, powerful farmer lobbies with millions of votes behind them in Europe, continue to oppose a Mercosur trade pact. European leaders say they'll take those objections into account and seek a more balanced trade pact than that thought possible last year and in the six years of inconclusive discussions before that.

"Seven rounds of negotiations have taken place and we would like to see on the table new proposals that improve those of 2004, when discussions stalled," Salafranca said.

The last round of EU-Latin American negotiations toward a Mercosur pact took place in Montevideo this month but ended with inconclusive talks on technical and regulatory issues.

However, analysts said Salafranca's involvement could push the process forward. He is a member of the conservative Popular Party that won a landslide victory in last Sunday's Spanish elections.