By Mike Godfrey, Tax-News.com, Washington

Colombia and Costa Rica have agreed to rapidly conclude negotiations towards a free trade agreement which will cut tariff barriers to trade from as early as the first half of 2013, and pave the way for Costa Rica to become the fifth member of a regional trade bloc.

The nations’ Presidents this month signed a deal committing both to push forward with negotiations in earnest, and to agree terms by the end of the year. The first round of talks is scheduled to begin on July 30, 2012.

Trade flows between the two nations are considerably one-sided, with Colombian exporters likely to benefit most from the pact. Trade between the two nations has ballooned in the last decade, from USD100m in 2001, to USD500m in 2011, but Costa Rica presently runs a significant trade deficit, exporting just USD48m worth of goods in 2011.

Costa Rican businesses have voiced concerns that the removal of tariffs and other protectionist levies will in fact be detrimental, as it may exacerbate local firm’s lack of competitiveness in comparison to their Colombian counterparts.

Nevertheless, Costa Rican President Laura Chinchilla has backed the deal, on the basis that a pact with Colombia would open the door to membership of the Alliance of the Pacific trade bloc, comprising of Colombia, Chile, Mexico and Peru.