Trade between neighbors Venezuela and Colombia is to be liberalized under an agreement signed here Monday by Venezuelan President Hugo Chavez and visiting Colombian counterpart Juan Manuel Santos.

"I am very pleased to have signed this accord ... this new trade treaty that will doubtless represent a lot of well-being for the Venezuelan people and for the Colombian people," Santos said in a ceremony at Miraflores Palace in Caracas.

The new bilateral pact replaces the rules that applied to trade between Colombia and Venezuela as members of the Andean Community, a regional grouping Caracas abandoned in April.

Monday's accord provides for the elimination of tariffs on 3,500 items accounting for a considerable portion of bilateral exchanges in last five years or so, Santos said.

Though more limited in scope, the agreement is focused on "the same objectives" as the broader trade treaty signed 20 years ago by the two Andean nations, the Colombian president said, referring specifically to the aim of eliminating both tariff and non-tariff barriers.

The potential for expanded trade between Colombia and Venezuela "is very great," Chavez said.

The two governments must continue "strengthening our friendship, our mutual confidence, our personal relations and, above all, our political relations," the Venezuelan leader said.

The value of bilateral trade topped $7 billion in 2008 before falling to $4.6 billion the following year and nearly collapsing entirely in 2010 amid a diplomatic spat between Chavez and Santos' predecessor, Alvaro Uribe.