Peru-Chile free trade pact to take effect Sunday

LIMA (Reuters) - A free trade pact between Peru and Chile will take effect this week, a sign that two of the most open economies in South America are deepening their commitment to trade to help weather the global economic crisis.

At a time when more leftist countries in the region such as Ecuador are putting up trade barriers, Peru and Chile are taking them down.

Peru's government has issued a decree saying that the deal, which was signed in 2006, will go into effect March 1.

While Peru and Chile have strong commercial ties, their diplomatic relations have been periodically rocky since Chile defeated Peru in the 1879-1883 War of the Pacific and won a chunk of mineral-rich land from its northern neighbor.

Peru filed suit against Chile last year at the International Court of Justice in The Hague, disputing their maritime border and demanding more of the rich Pacific Ocean fishing waters between them.

Even though both countries rely heavily on revenues from mineral exports that have plunged during the global crisis, they remain firmly committed to free trade.

Peru's trade pact with the United States went into effect this year, five years after Chile's deal with Washington started.