Some South American countriesare at a crossroads because they falsely believetheir only choice is between socialism or the American style of capitalism, Prime Minister Stephen Harper said Tuesday.

Speaking at the Canada-Chile Chamber of Commerce in Santiago, Chile, Harpersaid Canada will play a bigger role in Latin America and the Caribbean, but one that is different from what the United States plays.

"Too often some in the hemisphere are led to believe that their only choices are— if I can be so bold to say— to return to the syndrome of economic nationalism, political authoritarianism and class warfare, or to become, quote, just like the United States," Harper said, inwhat appeared to be a reference toVenezuelan President Hugo Chavez."This is, of course, utter nonsense."

"Canada's very existence demonstrates that the choice is a false one. Canada's political structures differ substantially from those in the United States," said Harper, who is on a six-day, four-country tour of South America and the Caribbean.

"Our cultural and social models have been shaped by unique forces, and we've made our own policy choices to meet our own needs."

He said Canada and Chile are both models of free market economies that retain the independence of their social and political lives.

In attendance were President Michelle Bachelet and two former presidents, Ricardo Lagos and Patricio Aylwin, along with business executives of the Canada-Chile Chamber of Commerce.

Earlier, Harper visited a new Scotiabank branch in Santiago, where he exchanged $60 Cdnfor Chilean pesos, a symbolic gesture marking the 10th anniversary of the Canada-Chile Free Trade Agreement.

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Chilean President Michelle Bachelet, right, talks with Canadian Prime Minister Stephen Harper in Santiago, Chile, on Tuesday. ((Santiago Llanquin/Associated Press))

Harper arrived in the Chilean capital overnight from Colombia, where he had met with embattled Colombian President Alvaro Uribe. The pair announced the start of trilateral free trade talks with Peru.

In his speech, Harper emphasized again that he believes Canada should be more engaged in this part of the world,CBC News Keith Boag said.

"This is what Harper considers Canada's neighbourhood and that in the future, you're going to see an even more activist foreign and trade policy in this region," said Boag.

First to sign

Canada was the first country to sign a bilateral free trade agreement with Chile. Chilean exports to Canada have quintupled since the deal came into effect in July 1997, with more than 300 Canadian companies active in Chile. Canada is also the top mining investor in Chile.

In the past 10 years, trade between the two countries has increased by 325 per cent, according to Canadian government officials.

The manager of Magnotta vineyard, an Ontario wineryoperating in Chile's Maipo Valley, said Chileans enjoy doing business with Canada.

Canada sees Chile as a reliable and safe country to do business in, said Pedro Amunategui.

Harper has been under pressure to address the issue of human rights during his visit, a topic that came up Monday during a news conference with Colombian president Uribe.

Uribe's government has been mired in scandal, with two senators in his party and one of his cousins linked to right-wing death squads. In Colombia last year, close to 700 people were kidnapped and more than 17,000 murdered. It is widely considered the western hemisphere's most dangerous country.

Harper said it was ridiculous to wait until the country had solved all of its problems before trying to offer economic help and praised Uribe for openly addressing its social, political and economic problems.

With files from the Canadian Press