Chile and China opened negotiations for a free trade deal in April last year. Once signed and ratified by both countries it will be the Asian nation's first ever with a Latin American country.
"Just a few minutes ago we successfully completed (negotiations) for both countries," Chile Foreign Relations Minister Ignacio Walker told local radio.
Chile wants to be the bridge between Asia, led by China's booming economy, and Latin America. The new accord is seen opening the door to Asian exports into the countries of Latin America's southern cone.
Presidents Ricardo Lagos of Chile and Hu Jintao of China will formalise the agreement at the mid-November Asia Pacific Economic Co-operation summit in South Korea, Walker said. He did not give a date for when the pact might be ratified by lawmakers here and put into effect.
Once in place, the accord will mean immediate, tariff-free access to China for more than 90 percent of Chilean exports, including copper.
Last year China was the biggest single buyer of Chile's copper exports, buying 18 percent, or $2.728 billion worth. That was the bulk of Chile's $3.2 billion 2004 exports to China. Chile's imports from China last year were a little over $1.8 billion.
China's rapid, robust economic growth has seen it consume base metals like copper at massive rates as it invests heavily in infrastructure.
Chilean state copper miner Codelco, the world's largest producer of the metal, this year entered into an agreement with China state-owned metals trading firm Minmetals Corp under which it pledged to invest $2 billion in Codelco in exchange for a guaranteed long-term supply of copper.
The new trade deal also means tariff-free trade access for other Chilean mineral exports, as well as vegetables and fish oils, Walker said.
Other products will see import tariffs drop gradually over five-year and 10-year periods.
Tariffs on wine for example, a product of which Chile is especially proud, will be cut over 10 years.
Twenty-five percent of Chile's trade is with Asia, where it already has a free trade accord with South Korea and is studying whether to begin talks on a similar accord with Japan.
Walker said the agreement would open Chile's market more to imports of Chinese automobiles, computers, printers and other technology goods.
He said 152 Chinese products, mostly textiles, had been excluded from the deal to protect local industry.