Canada, Chile Seek Pact Ahead of NAFTA Entry : Trade: Officials say deal will be folded into main accord once U.S. joins in.

Canada and Chile will start working out their own free-trade agreement within two weeks, without waiting for the United States to agree to Chile’s entry to the North American Free Trade Agreement, Canadian Trade Minister Roy MacLaren said Friday.

In mid-January, the two countries will begin negotiating “a bilateral accord that will encompass trade in goods, services, investment and dispute settlement,” MacLaren said.

“Canada remains strongly committed to furthering trade liberalization throughout the hemisphere,” MacLaren said. “An interim Canada-Chile agreement will assist Chile’s accession to the NAFTA, which in turn will increase momentum to an eventual Free Trade Agreement of the Americas.”

The United States, Canada and Mexico have pledged to expand NAFTA by including Chile first among Latin American nations, but progress has been held up by differences between Congress and the Clinton’s administration on “fast-track” authority to negotiate a deal that Congress cannot amend.

The Canada-Chile agreement would “be folded into the NAFTA” once the United States joins in and full negotiations are completed, MacLaren said.

Last December at the Summit of the Americas in Miami, leaders agreed to form a North and South America free-trade zone by 2005.

NAFTA unites Canada, the United States and Mexico in a tariff-free trade alliance. Chile already has a bilateral free-trade agreement with Mexico, and politicians in Chile and Canada said a bilateral agreement will help broaden NAFTA.

“We think that an agreement with Canada in 1996 is completely consistent with NAFTA,” Chile’s finance minister, Eduardo Aninat, said in Santiago.

Trade between Canada and Chile is small but growing. Canadian exports to Chile, at $195 million in the first nine months of 1995, are expected to exceed the $230 million of 1994, MacLaren said. Chile’s sales to Canada were $172 million in the first three quarters of 1995.

Canada is also becoming a large foreign investor in Chile, with current and planned investment of $5.15 billion.