The EU and Mercosur agreed to start trade talks five years ago

The move came after negotiations broke down over how much access should be given to goods from South America.

Brazil said Mercosur could not accept EU proposals to phase in quotas for its goods such as beef, chicken and ethanol over a 10-year period.

Mercosur consists of Brazil, Argentina, Paraguay and Uruguay.

The bloc has been negotiating a trade liberalisation deal with the EU since 1999, with the aim of concluding an agreement by October this year.

Officials say negotiations will start again on 9 August in Brasilia.

'Going backwards'

Brazil's international negotiations director, Regis Arslanian, who is Mercosur's chief negotiator at the talks, described the EU's proposals as "totally inadequate".

"The talks ought to be going forwards, not backwards, which is the case with the EU proposal," he said.

Mr Arslanian said the EU had offered a quota of 60,000 tonnes of beef imports, phased in over 10 years.

"That means 6,000 tonnes the first year - less than a single shipload," he told the Associated Press news agency.

European Trade Commissioner Pascal Lamy said last month that the EU had made concessions on sensitive issues such as agriculture, and now it expected Mercosur to make similar efforts.

Correspondents say the dispute threatens efforts by the South American bloc to establish new markets for its products, and reduce its dependency on trade with the United States.