Latin America summit: EU trade chief warns against protectionism

Although he did not mention any countries by name, his warning appeared to be aimed at the leaders ofBolivia and Venezuela, who have sparked international concern with recent moves seen limiting the activities of foreign energy companies.

Photo: Latin America summit: EU trade chief warns against protectionism

"There have been problems with certain Andean nations," Mandelson told reporters. He added that failure to allow companies to freely chose where they operate, "will see foreign investment become less mobile, more selective and choosy."

That "will do considerable damage to investment in certain countries," he warned.

Bolivia PresidentEvo Morales this month gave foreign energy companies six months to negotiate new contracts or leave his country, which has South America's second-largest natural gas reserves after Venezuela.

Venezuelan President Hugo Chavez, an ally of Morales, announced last weekend he would introduce a new tax targeting foreign oil companies in a fresh effort to seek a larger share of rising energy revenues. Foreign companies there already pay a royalty fee for extracting heavy crude.

Earlier this year, Venezuela took majority control of oil fields that private companies previously had operated independently under contract.

Mandelson acknowledged the EU's efforts to push forward free trade talks with the Andean region _ Colombia, Ecuador, Peru, Venezuela and Bolivia - has been delayed by political developments in the region. Chavez recently announced Venezuela will withdraw from the regional bloc.

Mandelson said governments have a choice between embracing cooperation with partner countries and a "narrowly focused, partisan, closed approach to global trade."

Concerns over the energy situation in Venezuela and Morales are expected to overshadow the three-day EU-Latin America summit, which starts Thursday in Vienna, Austria.