Jan. 28 (Bloomberg) -- Canada signed a free-trade agreement with the four-nation European Free Trade Association designed to improve access and fuel their $8.7 billion trade relationship.

Norway, Iceland, Switzerland and Liechtenstein signed the agreement to remove duties on goods with Canada, the EFTA countries' fifth-largest trading partner in 2006, the association said in a statement on its Web site. The accord was signed during the World Economic Forum at Davos, Switzerland, two days ago.

Canada exports nickel, machinery and mechanical appliances to EFTA, which together with the European Union forms what is known as the European Economic Area. The four EFTA nations are among the 10 richest countries in the world, according to the association, as measured by gross domestic product per capita.

``This agreement, which is focused on trade in goods, has the potential to yield significant benefits for exporters in all five countries,'' EFTA said. ``The coverage of EFTA's worldwide trade in goods through free-trade agreements will increase by one third, from 3.5 percent to 5.3 percent.''

Two-way trade in goods amounted to $8.7 billion in 2006, and ``preliminary data indicate this trading relationship continued to grow in 2007,'' EFTA said.

Norway, which exported merchandise worth more than 20 billion kroner ($3.6 billion) to Canada last year, hopes the deal will boost the country's shipbuilding industry, according to a statement on the government's Web site.

EFTA is negotiating free-trade accords with the Gulf Cooperation Council, Algeria, Thailand, Colombia and Peru and expects to start talks with India ``in the very near future,'' the association said.

To contact the reporter on this story: Robin Wigglesworth in Oslo at wigglesworth@bloomberg.net

Last Updated: January 28, 2008 05:47 EST