Chile, Panama Sign Free Trade Pact

Chile and Panama inked last week a free trade agreement that will scrap 98 percent of tariffs levied on trade between the countries over the next ten 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.

While the agreement will take effect over a period of years, the Authorities at the Panamanian Commerce and Industry Ministry said cooperation between Chile and their country was already bearing fruit

because the two nations have a longstanding commercial relationship.

The majority of the trade is in Chilean exports to Panama, which reached $111.5 million out of $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.

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.

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.