Panama's government has signed a free-trade agreement with Guatemala, Central America's biggest economy with 11 million residents.

Panamanian President Martín Torrijos called it a “historic step,” observing his trade minister, Alejandro Ferrer, and Guatemalan Finance Minister Juan José García sign the treaty yesterday during President Alvaro Colom's visit to Panama.

“We've achieved an equal bilateral negotiation,” said Torrijos of the Guatemalan alliance. He continued, “We can attest to the fact that a real deepening of Panama's commercial relations with Central America is already a total reality.”

He called the pact “key” for integration, one that will “allow a stronger Central America and will allow us to move forward.”

President Colom, for his part, characterized the accord as “realizing a sincere friendship between Panama and Guatemala.”

Trade between the two countries in 2007 grossed $120 million.

As far as free trade with its region, Panama is on a roll. Yesterday's signing came on the heels of another pact with Costa Rica that took effect last week. Panama green-lighted free trade with Central America in 2002, signing a protocol that allows it to enter bilateral partnerships with countries throughout the region. Looking beyond the isthmus, Panama is also on track for free trade with Chile in March.

-ACAN-EFE