Thailand plans to reduce tariffs on Chilean goods by 90% under a new free trade agreement (FTA) that was signed between the two countries last week.

Trade between the two countries was valued at more than US$1 billion last year, highlighted as "complementary" in a Chilean government release because the South American country mainly purchased industrial goods from Thailand, which in turn bought raw materials from Chile.

Chilean President Sebastian Piñera and Thai Prime Minister Yingluck Shinawatra

The trade balance is definitely in Thailand's favor, which shipped US$715 million worth of goods to Chile last year, according to newspaper Diario Financiero.

Chilean Foreign Affairs Minister Alfredo Moreno said the remaining 10% would be cut in the coming years, labeling the deal as "very significant as it is an economy that has very high tariffs, so the advantage for Chile will be very large and will widen the possibilities for [our] national products".

"Thailand is an economy of more than 70 million people and is the fifth member economy of ASEAN to have a free trade agreement with Chile."

Chile's is Thailand's third largest trading partner in South America behind Brazil and Argentina.

"This free trade agreement is historic because it is the first that Thailand has signed with a Latin American country," said Thai Prime Minister Yingluck Shinawatra.

Horticultural products in Chile's Thailand-bound portfolio include walnuts, avocados, raisins, tomato paste, table grapes, apples and wine, and from Thailand it receives goods including canned pineapples and coconut milk.

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