Pubdate: Sat, 26 Jun 1999 Source: Standard-Times (MA) Copyright: 1999 The Standard-Times Contact: http://www.s-t.com/ Author: Peter Muello, Associated Press writer EUROPE CHALLENGES U.S. IN HEMISPHERE RIO DE JANEIRO, Brazil -- Even before it starts, the summit of European, Latin American and Caribbean leaders has challenged the United States and its special relationship with Western Hemisphere nations. The possibility of a free trade zone linking the European Union and the Mercosur trade bloc is a new option for South America, a region sometimes seen as North America's back yard. And though free trade is years away at best, there clearly is a new player at the table. "We cannot go down just one path, or put all our eggs in one basket. We want equilibrium," Brazilian Foreign Minister Luiz Felipe Lampreia said. The two-day summit that starts Monday will bring together at least 40 leaders -- organizers aren't sure yet who is coming. The free trade talks are the centerpiece, but they will also discuss a "strategic partnership" that includes respect for democracy and human rights, sustainable development and a commitment to stamp out drug trafficking. Today, senior officials meet at the refurbished Museum of Modern Art to work out the final draft of the Declaration of Rio de Janeiro and a project for joint action that the leaders will sign. Then it's the turn of foreign ministers, who meet tomorrow. An obstacle to the free trade talks was removed this week when the 15 European Union nations agreed to authorize negotiations at the summit with Mercosur -- which includes Brazil, Argentina, Paraguay, Uruguay and associate members Chile and Bolivia. Still, talks on reducing tariffs wouldn't start before 2001, and a final agreement would not be concluded until the end of the next round of World Trade Organization talks, which could last many years. Europeans are worried about a massive inflow of cheap produce from South America. France and Spain insist on excluding cereals, beef and sugar. Still, Mercosur benefits by playing Europe against the United States, which has its own proposal for a Free Trade Area of the Americas to start up by 2005. "It's Brazil's strategy to raise the competition and force the United States to offer a better deal," said Jose Luciano Dias, an analyst with Goes e Consultores. "Brazil is looking for another card, but there's no game without the United States." The summit is Rio's biggest international event since the 1992 Earth Summit, and the city has spent more than $12 million on a facelift. Tunnels were scrubbed, streets paved, lampposts painted, and even the beggars and street kids that hung out near the museum moved out. Some 8,000 police and army soldiers yesterday checked the museum for bombs and moved into the often-violent shantytowns that rise above the hotel district and the route motorcades will follow from the airport - --- MAP posted-by: Derek Rea