"I'm happy to announce that negotiations will begin this fall, in order to expand and modernize this agreement between now and next year," Harper said after meeting with Costa Rican President Laura Chinchilla.

The free trade agreement has made Costa Rica a major Canadian trade partner in Central America, but Harper said it does not extend to services "and no longer corresponds to the current spirit of cooperation on labour and environment."

During the Canadian's visit, the two countries also signed an air transport agreement, and a tax information exchange agreement aimed at helping authorities combat tax evasion.

Trade has been the top item on Harper's agenda on a Latin American tour that has also taken him to Brazil and Colombia. He ends the trip Monday in Honduras.

Copyright AFP (Agence France-Presse), 2010