MercoPress. South Atlantic News Agency

Chile and Panama sign free trade pact

Chile and Panama yesterday signed a free trade agreement that will eliminate 98 percent of tariffs on trade between the countries within 10 years.

??Panama and Chile are generating the necessary conditions for an economic takeoff that will allow us to leave underdevelopment behind,'' said Panamanian Vice-President Samuel Lewis Navarro.

Chilean Foreign Relations Minister Alejandro Foxley described Panama as ??politically close'' to Chile.

While the agreement will take effect over a period of years, Panamanian Commerce and Industry Minister Alejandro Ferrer said that cooperation between Chile and his country was already bearing fruit. The two nations have a longstanding commercial relationship.

The majority of the trade is in Chilean exports to Panama, which reached US$111.5 million out of US$122.3 million in bilateral trade last year. Panama hopes the pact will narrow the imbalance.

Chile is the fourth-heaviest user of the Panama Canal, a position which could be boosted by the pact, according to Foxley. He also expressed support for plans to expand the canal.

Lewis Navarro said the pact would increase Panamanian exports of products such as tropical fruit on ships that currently head south nearly empty to pick up Chilean products.

Foxley said that the pact will bring Chile preferential access to Panamanian market, as well as increased support in accessing other Central American markets. The pact will also help the nations work together on fighting organized crime, drug trafficking and terrorism, Foxley said.

Foxley and Lewis Navarro said they will collaborate at a World Trade Organization meeting in Geneva later this week and work on winning Panama's membership in the Asia-Pacific Cooperation forum.

Chile has been ruled by a series of left-leaning coalition governments since 1990 that have espoused free market export-driven policies while moving to eliminate trade barriers.

Chile has close trade with the United States that expanded after a bilateral free trade agreement with Washington took effect in January 2004. Chile also has free trade agreements with Mexico, Canada, Korea and the 25 European Union nations.