The United States is seeking a free trade agreement with the Common Market of the South (Mercosur), Latin America's largest trading bloc, according to a top U.S. diplomat.

Argentina's ABC Color newspaper on Monday quoted U.S. Ambassador to Paraguay, James Cason, as saying that his country is seeking a deal either with Paraguay or with Mercosur.

Cason, who had not yet made an offer to Paraguayan President Nicanor Duarte Frutos, said "the deal would bring many benefits to both sides.

The United States has free trade deals with Chile, Mexico and Panama, he said, adding that U.S. interests not only lie with signing deals with individual countries, but also with regional groupings like Mercosur.

"I have the impression that Paraguay wants to sign a deal alongside the Mercosur countries and it has a right to do so," he said.

Mercosur groups Brazil, Argentina, Paraguay and Uruguay, with Chile and Bolivia as associate states.

Washington has repeatedly made overtures to Mercosur which says it will not restart talks on the Free Trade Area of the Americas unless the United States drops its current agricultural subsidies.

Last month, U.S. senator Mel Martinez was reported as suggesting that a free trade treaty between Uruguay and the United States had been worked out, and only needed to be ratified.

Uruguay's Foreign Minister Reinaldo Gargano immediately denied the report, reiterating that his country supports the Mercosur stance against U.S. subsidies, as was voiced at the 4th Summit of the Organization of American States in November.

Martinez himself later made a clarification saying his earlier remarks had referred to a bilateral investor protection treaty, not a free trade agreement.

Source: Xinhua