Prime Minister Stephen Harper and Chilean President Sebastian Pinera announced an agreement Monday to modernize the free trade deal between their two countries and Harper also secured Chile's support for Canada's bid to join the Trans-Pacific Partnership trade talks.

The Canada-Chile Free Trade Agreement, which came into force in 1997, will now include a financial services chapter that will help give Canadian financial institutions preferential access to the Chilean market, the government said in a news release after Harper met with Pinera in Santiago.

"This new deal will bring more trade, jobs and prosperity to both countries," Harper said at a news conference with Pinera. "This is all part of Canada's ambitious trade agenda." 

The trade deal's chapters on dispute settlement, customs procedures and government procurement were also updated and Harper and Pinera also agreed to finalize remaining steps to open their markets to beef and beef products as soon as possible.

Canada is the world's largest investor in Chile's mining sector and the two leaders said they welcome a growing diversification of investment in other sectors beyond mining, including financial services, energy and infrastructure. Canadian investment in Chile was valued at $13.3 billion in 2010 and two-way trade was estimated at $2.7 billion in 2011.

Pinera said at a news conference with Harper that Canada is one the largest economic powers of the world, that Chile is growing and that he is pleased their ties are becoming stronger.

Harper echoed that sentiment and said the trade benefits for Chile and Canada are "plain to see."

Key to Harper's meeting with Pinera on Monday was securing Chile's support for Canada's bid to enter negotiations for the Trans-Pacific Partnership trade agreement.

Chile gives support for TPP bid

"I note with great appreciation the president's support for Canada to join the Trans-Pacific Partnership," Harper said.

Chile is one of the nine countries involved in the trade agreement with the United States, Peru, Australia, Malaysia, Brunei, New Zealand, Vietnam and Singapore, that is still in the process of being negotiated.

Harper indicated last fall that Canada wants to enter the talks, and he and International Trade Minister Ed Fast have been working on gathering endorsements. All nine nations must agree to allow Canada to join and so far six of the nine have confirmed their support.

The United States, Australia and New Zealand have not given formal backing to Canada's proposal to join.

Canada's supply management system in some agricultural sectors, including the dairy sector, may be viewed as a barrier to participating in the TPP. Harper's government has said it will protect Canada's interests in any trade deal.

Conservative MP Deepak Obhrai, parliamentary secretary to Foreign Affairs Minister John Baird was asked by Evan Solomon on CBC-TV's Power & Politics whether the government is willing to give up the supply management system in order to gain entry into the trade deal.

"We don't know what they're asking [for] until we get to the negotiating table," he said. "We will come to the table and we will discuss all these issues.

"We are going to negotiate free trade agreements that are beneficial for both countries. Period," he responded later in the interview when he was asked again about supply management.

Liberal MP Wayne Easter said the United States, New Zealand and Australia have made it clear that dropping supply management is a condition of joining TPP and he thinks Harper would be willing to comply.

"Dairy farmers, and supply management producers, watch out," Easter said on Power & Politics.

NDP MP Brian Masse also said he believes supply management will be on the table if Canada is allowed to join the TPP.

The nine countries in the TPP represent a market of 505 million people and a GDP worth $17 trillion.

Harper also announced Monday that Canada is contributing $3.8 million over five years to a rural training centre for youth in Chiloé and $450,000 to help restore part of a national park that was destroyed by fire.

Among the other outcomes of the bilateral meeting was the signing of a memorandum of understanding on defence co-operation. Canada and Chile are aiming to increase collaboration on policy, research and development, peace and humanitarian operations, and military education and training.

Harper comments on Charter anniversary

Harper participated in a wreath-laying ceremony at a national monument before he was welcomed by Pinera at the presidential palace in Santiago earlier in the day.

The prime minister answered questions from Canadian reporters travelling with him after his meeting with Pinera and was asked about the 30th anniversary of the Charter of Rights and Freedoms.

"The charter was an important step forward I think in the development of Canadian rights policy, a process that began in earnest with John Diefenbaker's bill of rights in the 1960s," Harper said. In terms of marking the anniversary, Harper said the charter is "inextricably linked to the patriation of the constitution and the divisions around that matter are still very real in some parts of the country."

Quebec did not sign the Constitution Act in 1982 that included the charter.

The prime minister was also asked about comments he made on the weekend at the conclusion of the Summit of the Americas in Colombia on drug policy when he said the war on drugs isn't working.

Harper said on Monday that drug gangs continue to grow and the products they sell are more addictive and cheaper and that's a problem for the whole hemisphere.

"All leaders are interested in looking at a variety of approaches but very, very few leaders think that anything should be done other than fighting this particular scourge on our populations," he said.

Harper commented on a Canadian on death row in Iran and his government's request that Hamid Ghassemi-Shall be released on compassionate grounds.

"We're working with our international partners and I think our view is known and the government of Iran should know that the whole world will be watching and they will cast judgment if terrible and inappropriate things are done in this case," he said.