Colombia is set to sign a free trade agreement with Costa Rica, marking another step toward Colombia’s regional free trade policies with other Latin American and Pacific states.

Minister of Commerce for Colombia Sergio Diaz-Granados told local media that “the Costa Rica stage is well-advanced.” Costa Rica is in line to join the four Latin American states (Colombia, Chile, Peru and Mexico) that share Pacific coastlines and a willingness to develop stronger regional economic integration.

A free trade agreement with Costa Rica falls in line with the open market policies that President Juan Manuel Santos’ administration strongly believes make up the path toward development for Colombia. In addition to a free trade agreement with the US that went into effect roughly a year ago, Colombia is in the process of finalizing agreements with the EU and South Korea.

Beyond a series of bilateral trade agreements, Colombia has also joined the Pacific Alliance, an economic alliance that turns the resource-rich country’s focus toward Asia’s emerging economies.

The Pacific Alliance, formed in 2012, set framework for regional economic cooperation. Among the priorities shared by the four member states are capital market integration and free trade agreements. But Colombia Finance Minister Mauricio Cardenas hopes the alliance will move beyond issues of trade alone.

“We want the Pacific Alliance to be an alliance… where our capital markets are integrated so our companies can move much more freely in making investments in each of the four countries, ” said Cardenas, after meeting with the group’s finance ministers earlier in the month.

Colombia, Chile, Peru and Mexico are set to remove 90% of tariffs during the May 23rd summit in Cali, reported The Economist.

Trade with other Latin American states makes up roughly 27% of total global trade around the region. That is little compared with 63% in the European Union and 52% in Asia. But the Pacific Alliance could change that. The block’s combined output was just under Brazil’s annual GDP in 2012. And in 2011-2012 the alliance grew at 4.6% compared to Brazil’s 1.8%.

The group relies on the ethic of “open regionalism,” an idea that was popular among Latin American states in the 1990s. In 1991, Mercosur formed with the intention of putting those ideas into practice. Since then, however, most of its members, including Brazil, Argentina and Venezuela, have turned inward, letting protectionist economic policy cut off trade ties with regional neighbors in favor of domestic economy.

When in Cali, the Pacific Alliance will also take a technical look at what Japan’s membership would mean for the group. If the Alliance welcomes Japan as its 5th member, it will not only be taking a step toward opening its markets, but another leap toward Asia-Pacific integration.

Source: Today Colombia