BEIJING, Aug. 31 -- China and Nicaragua on Thursday signed a free trade agreement (FTA) after year-long negotiations in the latest effort to enhance bilateral economic and trade cooperation.

The deal was inked via a video link by Chinese Minister of Commerce Wang Wentao and Laureano Ortega, advisor on investment, trade and international cooperation at the Nicaraguan president's office, China's commerce ministry said in a statement on Thursday.

Following the signing of the FTA, the 21st of its kind for China, Nicaragua has now become China's 28th global free trade partner and fifth in Latin America.

As an important measure to implement the consensus reached by the leaders of the two countries, the FTA will facilitate high-level mutual opening up in areas such as goods and services trade and investment access, according to the statement.

The ministry described the signing of the FTA as a milestone in China-Nicaragua economic ties, which will further unleash potential in trade and investment cooperation and benefit the two countries and their people.

About 60 percent of goods in the bilateral trade will be exempted from tariffs upon the FTA taking effect, and the tariffs on over 95 percent will be gradually reduced to zero. Major products from each side, such as Nicaraguan beef, shrimp and coffee, and Chinese new energy vehicles and motorcycles, will be on the tariff-free list.

Being a high-standard trade agreement, this FTA marks China's first instance of opening cross-border service trade and investment through a negative list. It also features provisions for the stay of business people's parents, comprises aspects of the digital economy, and stipulates cooperation in measurement standards in the technical trade barriers chapter.

According to a ministry official, the two economies are highly complementary and there is huge potential for trade and investment cooperation.

In 2022, the bilateral trade volume between China and Nicaragua stood at 760 million U.S. dollars. China is Nicaragua's second-largest trading partner and second-largest source of imports. Nicaragua is China's important economic and trade partner in Central America and an important participant in the Belt and Road Initiative.

The two sides will now carry out their respective domestic procedures to promote the early implementation of the FTA, the statement added.