BRASILIA (Reuters) – The European Union and South America’s Mercosur trade bloc could reach a free trade agreement in principle this year, the foreign ministers of Brazil and Germany said yesterday.

“It is not impossible that we’ll have more than the basis for an EU-Mercosur agreement by year-end,” Brazilian Foreign Minister Celso Amorim told a news conference after meeting with his German counterpart in the capital Brasilia.

Interest in the stalled trade negotiations between the two groups revived due to the global financial crisis last year.

Hope among diplomats from both sides also was fuelled when Spain took over the rotating presidency of the EU in January. The Iberian country has close trade ties with many South American nations.

“There’s no guarantee but there’s good will,” German Foreign Minister Guido Westerwelle told the news conference in a reference to the talks. Westerwelle, who is on a three-day state visit to Brazil, said a trade accord would be good for job creation in Europe.

“This is good news,” said Westerwelle, adding that there was a revival in trade ties between Germany and Brazil in recent months.

Mercosur is made up of four founding members — Brazil, Argentina, Uruguay and Paraguay. The remaining South American countries, with the exception of Suriname and Guyana, are associate members.

Trade between the EU and Brazil alone was valued at $63 billion in 2009.

EU-Mercosur talks were launched nearly a decade ago and came close to a deal before being put on hold in 2005 in expectation of progress in the World Trade Organization’s Doha round of trade talks.

The EU already has a free-trade agreement with Chile and is in advanced trade talks with Peru and Colombia.