On May 2008 the Governments of Canada and Panama agreed to participate in exploratory discussions on the possibility of a free trade agreement. The first round of negotiations took place on 29 October 2008 in Ottawa, Canada. The second was held on 1-5 December 2008, in Panama City, and the third round of negotiations took place the week of January 12-19, 2009 in Ottawa. The fourth round of free trade negotiations ended on 25 March 2009. On August 1st, 2009, Canada and Panama concluded free trade negotiations.
On 14 May 2010, the parties signed the Canada-Panama FTA and parallel agreements on labour cooperation and environment.
On August 22, 2011, Canada and Panama signed a memorandum of understanding relating to the interpretation, application and administration of Chapter Four (Customs Procedures) of their FTA.