The agreement contains provisions for lowering tariffs between the two countries, allowing Costa Rica to take a slower pace on this because it is viewed as having an economic disadvantage to Canada.
Canadian Prime Minister Jean Chretien called the deal a "useful precedent for other agreements we may sign."
At last weekend's Summit of the Americas in Quebec City, countries in North and South America agreed to have a hemispheric trade deal negotiated by 2005. As well, Canada is currently pursuing bilateral agreements with countries such as El Salvador, Guatemala, Honduras and Nicaragua.
The Canada-Cost Rica free-trade deal comes with side agreements requiring each country to enforce their domestic laws on labour and the environment.
