There are those who say that this week's summit of European, Latin American and Caribbean leaders in Brazil's carnival city Rio De Janeiro produced plenty of hot air and little else.

There was undoubtedly lots of it in Rio's Museum of Modern Art on Monday and Tuesday, where 48 national leaders, ranging from Jacques Chirac to Fidel Castro, met to sign the Rio Declaration, which heralds a new "strategic partnership" between Europe and Latin America. If the details of that partnership remain vague, however, that should surprise no-one.

However, this summit was never supposed to write a detailed blueprint for the future. The real purpose of Rio was to provide formal recognition and firm underpinning for something which is already happening, but which is still a well-kept secret to most people in Europe: Latin America has come of age as a regional economic power. Seen from that perspective, the summit was remarkably successful, and even from a purely practically viewpoint it produced more concrete follow-up proposals than had been expected.

Europe and Latin America are now committed to meeting regularly to resolve contentious issues, ranging from protectionism in agriculture to establishing controls over turbulent financial markets.

When the Millennium Round of World Trade Organisation (WTO) talks start in Seattle in the autumn, the two regions are likely to find that they are as close to one another as either is to the US. "Latin America is going to be a different kind of player at the next WTO round as a result of this summit," said the Tanaiste, Ms Harney, who, with Foreign Minister, Mr David Andrews, represented the Government at the summit. "The whole EU-Latin America thing is about Europe saying: `The US has had a monopoly in this region. We should get in there too," she told The Irish Times before she signed the declaration on Tuesday.

Latin America's rapid rise in business ranking from "Third World" to "emerging market" to potential partner of the great economic powers has been remarkable. The process has been complex, but there are two basic keys: democratisation and regional integration.

Twenty years ago, most of the continent was run by dictators like generals Pinochet in Chile and Videla in Argentina. Today, democratic elections are the norm almost everywhere. While corrupt political patronage remains chronic, Latin America's new democratic institutions have weathered the financial crises of the last two years considerably better than the authoritarian Asian tiger regimes. International financial turbulence forced Brazil to devalue and float its supposedly ultra-stable new currency, the real, last January, and for a few weeks it looked as if Latin America's leading economy had run into the sand. But its political and financial institutions held firm, and its recovery, while very painful and far from complete, has been much faster than that of its Pacific Rim counterparts.

A significant factor in Brazil's resilience was its membership of Mercosur, the customs union which links it with Argentina, Uruquay and Paraguay. Chile is on the point of becoming a fully active member, and Bolivia is an associate.

Mercosur, which was set up only in 1991, has been by far the most successful Latin American effort at regional integration, and sees itself as an embryonic Latin American EU. It tends to set the economic agenda for the whole region, and while Mexico cochaired the Rio summit, it was very much a Mercosur-led affair.

It is fairly easy to see why. Mercosur (excluding Chile and Bolivia) has a population of 209 million people. It is the fourth largest geo-economic area in the world, with a GDP in 1998 more than $1.14 billion (€1.10 billion), considerably more than China's. Its average GDP growth rate (1990 to 1998) was 3.6 per cent, twice that of the EU. Its GDP per capita ($5,500) is higher than the Czech Republic's and much higher than Malaysia's. A quarter of its exports go to the EU, 15 per cent to the US, and only 10 per cent to the rest of Latin America.

While monetary union is still some way off, it is now a declared aim of Mercosur. So is an increasing level of integration with other Latin American regional blocs, in particular the Andean Pact, made up of Peru, Venezuela, Colombia, Ecuador and Bolivia.

Just as there have been many differences between EU members, so there are divergences within Mercosur. Argentina and Uruguay often feel Brazil, with 80 per cent of the group's population, goes its own way when it suits it. They particularly feel that Brazil, with its more diversified economy, does not push hard enough for their agricultural interests.

Argentina feels closer to the US than its Mercosur neighbours, and Brazil has been most active in pursuit of union with the Andean Pact. Despite these differing emphases, the trend towards economic integration, both within Latin American and with other regions, now seems irreversible. The real questions are: with whom? And how fast?

The possible permutations are about as simple as three-dimensional chess. The push towards integration within the region will be determined, to a greater or lesser extent, by a triangular relationship with the US and the EU. The US wants to extend the existing North American Free Trade Association (NAFTA), which already includes the very significant economy of Mexico, into a Free Trade Area of the Americas.

In the US vision, the FTAA would ultimately include most or all Latin American countries. Mercosur is committed to negotiations with the FTAA, aimed progressively eliminating trade and investment barriers, starting in 2005.

Simultaneously, Mercosur will be negotiating a free trade zone with the EU, quite possibly in concert with other Latin American countries, as agreed at the Rio summit. Meanwhile, Mexico is also advancing its own trade agreement with Brussels. And on top of all that, all of these countries and regional blocs will also be negotiating with each other, and with Russia, Asia, Africa and Australia, in the Millennium Round of the World Trade Organisation.

Confused? So are Brazilian business leaders, who have recently warned of the chaos which could result from advancing on so many fronts at once. They got short shrift from Brazil's president, Fernando Enrique Cardoso, who said at the end of the summit: "Business people are like politicians - they are not happy if they are not moaning about something." As Latin American leaders come closer to standing their full height on the world economic stage, they are acknowledging that economic maturity will bring pain as well as gain. If they want the EU to drop the CAP barrier, for example, they will also have to open up their own protected services and automobile sectors.

"Agriculture is a delicate issue for the EU today," said Mexico's president, Mr Ernesto Zedillom after signing the Rio Declaration, "tomorrow Latin America must face up to its own delicate issues". It will be interesting to see how well both regions have dealt with their "delicate issues" when they reconvene the Rio summit in Madrid in 2002.