The four-nation European Free Trade Association (Efta) said yesterday it had initialled a free trade agreement with Chile which will be formally signed in June and go into force in January next year.

The pact, negotiated over the past two years, is the second between Efta - which links Switzerland, Norway, Iceland and Liechtenstein - and a Latin American country. The first, with Mexico, was signed in 2000.

An Efta statement said the agreement covered exchanges of goods, services, investment, competition policy, government procurement and intellectual property rights.

It also included bilateral agreements between Chile and the four Efta countries on agricultural produce, on which Efta does not negotiate for its members.

The 43-year-old Efta, which is linked to the European Union through the European Economic Area (EEA) agreement, has trade pacts with 20 countries and territories in North Africa and the Middle East, eastern and central Europe and Asia.