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January 27 2013, 09:15AM

Leaders of crisis-hit Europe have kicked off a two-day summit with their counterparts from resource-rich Latin America, seeking closer trade ties but also assurances against protectionism.

Some 60 countries are represented at the meeting, which began on Saturday, between the 27-member European Union and the Community of Latin American and Caribbean States, or CELAC.

Set up in Caracas in December 2011 at the behest of Venezuela, CELAC groups all nations from across the Americas except the United States and Canada and aims to boost regional trade and integration.

Summit host Chilean President Sebastian Pinera warmly welcomed his guests and called for a new "strategic alliance to achieve sustainable development".

The EU is the biggest outside investor in Latin America, accounting for three per cent of direct foreign investment in CELAC or $US385 billion ($A369.85 billion) in 2010.

EU officials noted that the figure exceeds the combined investment in China, Russia and India.

But European leaders made clear that closer trade ties depended on assurances that Latin America will shun protectionism and protect foreign investment.

"We need a strong political commitment to rein in protectionism and promote liberalisation," European Commission President Jose Manuel Barroso told a meeting of business chiefs leaders shortly before the political summit's opening.

"It is fundamental to guarantee legal transparency and establish respect of international norms for investment."

Powerful German Chancellor Angela Merkel, whom the Chilean press has dubbed "Europe's boss", called for "cooperation without barriers to trade".

"No one should think that the best manner to overcome the (economic) crisis is protectionism," she said.

The Europeans are keen on securing the speedy conclusion of a free trade pact between the EU and the South American trading bloc Mercosur.

Negotiations have so far stumbled over differences on agriculture - notably Europe's subsidies to its farmers, which undermine South America's efforts to sell its own products.

Merkel warned that closer cooperation depended on "open markets, free trade and no protectionism".

Argentine President Cristina Kirchner, who has taken some protectionist measures, said that the EU-Mercosur negotiations, launched in 2004, must restart on a "new basis" that can clear the way for a deal.

"The negotiations with the EU cannot be based on decisions made in 2004. We need new premises, first among all Mercosur members, not just between Brazil and Argentina," she said after a bilateral session with Brazilian President Dilma Rousseff.

Kirchner suggested establishing an ad hoc Mercosur panel to come up with fresh proposals and make a new offer to the EU later this year.