In the aftermath of the War of the Pacific (1879-1884), which pitted Chile against Bolivia and Peru, territorial disputes left deep scars and complicated diplomatic relations. The Treaty of Peace and Friendship, signed in 1904, aimed to solve the tensions surrounding the coastal territory known as the 'Littoral Zone.' As a result of the war, Bolivia lost its coastal access to the Pacific Ocean, assimilating the regions of Antofagasta and Tarapacá into Chile. This treaty established the definitive borders between Chile and Bolivia, facilitating economic cooperation and enhancing Chile's strategic position in the region.

The treaty was signed in La Paz, Bolivia, by representatives from both nations, and it included provisions regarding trade, transit rights, and the obligation to maintain peaceful relations. Notably, it also recognized Bolivia's sovereignty over its territory despite its lack of access to the ocean. Although this agreement ended hostilities, Bolivia's loss of coastal territory remains a contentious issue in Bolivian politics, often referred to as the 'maritime question.'

The signing of the treaty marked a transformation in diplomatic ties, transitioning from conflict to cooperation. Chile emerged as a regional power while Bolivia was left landlocked, prompting historical grievances, economic implications, and nationalistic sentiments within Bolivia. The implications of this agreement would persist, influencing future negotiations and diplomatic relations.