Chile's minister for foreign relations Alejandro Foxley said Thursday that the government expected to sign a free trade agreement with Japan by the end of the year.

Speaking at a meeting of the Chile-Japan Business Committee in Santiago, the minister said that he hoped talks could be concluded in time for the APEC summit later this year. The lifting of Japan's 3% tariff on copper cathode from Chile threatens to eat into the margins enjoyed by Japan's custom copper smelters and force them to compete more stringently for scarce concentrate with rivals in China and India, said a source with a major copper producer.

Copper, Chile's largest export, dominates commerce between the two countries. In 2005, Chile exported $2.07 billion worth of copper to Japan, mostly in the form of concentrate. But Foxley said that he hoped the deal would lead to Chile diversifying its exports to Japan, especially in the agricultural sector.