San Jose  - Two years after Costa Rica broke ties with Taiwan in favour of relations with China, the two countries were moving forward on a free trade agreement Tuesday at meetings in San Jose.

The delegate from Costa Rica's negotiating team, Fernando Ocampo, indicated that important advances had been made in the area of customs procedures and services on the second day of talks.

"Monday were were more focused on ... goods and supplies," he said.

Costa Rica was insisting on the need to safeguard special products from low-priced goods from China that would affect local manufacturers, he said.

The next round of talks is September in Beijing.

Free trade talks were launched in November with a declaration in San Jose by Costa Rican President Oscar Arias and Chinese leader Hu Jintao on his first visit to a Central American country.

Only 23 remaining countries still recognize Taiwan, half of them in Latin America and the Caribbean.

China is Costa Rica's second-most-important trade partner, even though the two countries did not have diplomatic ties prior to June 2007. Bilateral trade is now estimated at 2 billion dollars per year.

Prior to the establishment of ties, trade took place through intermediaries or third countries. Costa Rican commercial authorities believe a free-trade deal will increase the export of goods to China by 11 per cent in the short run.

China has granted Costa Rica 430 million dollars in aid, including the purchase of 300 million dollars in Costa Rican debt titles and the construction of a new stadium in San Jose worth over 83 million dollars. (dpa)