By Martin Murphy BBC Spanish American Service

Chile's recent trade deal with the European Union does not affect the country's plans to join south American trade bloc Mercosur, Chilean Economy Minister Jorge Rodr�guez Grossi has told the BBC's Spanish Service.

Mercosur members

Argentina Brazil Paraguay Uruguay

Chile and the European Union wrapped up negotiations over the deal in Madrid earlier this month.

The agreement is expected to boost trade and investment between Chile and the EU.

It also encourages both sides to cooperate in the field of foreign and security policy.

Some analysts have said the agreement makes it likely that Chile will postpone its plans to join Mercosur indefinitely.

Argentina bailout

Mercosur economies, especially the smaller ones, have been hit hard by the Argentine crisis.

Grossi: Argentina must sign a new deal with the IMF

"This (Mercosur) is our neighbourhood, and we want a bright future for the region," said Mr Grossi.

"We are very worried about what is going on in Argentina and we'd like to see the country back on its feet," he added.

But he said Chile would only participate in a bailout package for cash-strapped Argentina if the country reached a deal over aid and economic reforms with the International Monetary Fund - something which the Argentine government has so far failed to achieve.

Competition

Mr Grossi's government is also working hard to convince Bolivia to choose Chile as an exit point into the Pacific for a gas export project.

Bolivia is also in talks with Peru.

At a recent meeting in Lima, Peru offered to comply with "100% of the Bolivian demands" in order to land the deal.

Rodr�guez Grossi declined to say whether Chile was willing to go that far.

Some analysts claim that Bolivia's closer links with Peru will influence the Bolivian government's final decision.

"I am not worried about that, we also have very close ties with Bolivia," said Rodr�guez Grossi.

Chile and Bolivia fought a border war in the late 19th century that resulted in Bolivia becoming a land-locked country.