Chinese Premier Wen Jiabao told the 10-member Association of Southeast Asian Nations that the agreement on services "signifies that the development of a China-ASEAN free-trade zone has taken a crucial step forward."

The participants expect the services pact, signed at a regional summit in Cebu in the central Philippines, to trigger increased levels of trade and investment after its implementation in July.

China and ASEAN aim to have the foundation of a full free-trade area laid by 2010, with China, Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand hoping to drop tariffs on most products by then.

China and the remaining ASEAN members - Cambodia, Laos, Myanmar and Vietnam - will target that goal five years later.

Under the deal signed yesterday, service providers in the region will enjoy improved market access.

The agreement is also expected to bring higher levels of investment in the region, particularly in construction, engineering, energy, travel, transport, education, telecommunications, culture and sports.

"Successive rounds of market access negotiations to substantially improve the level of commitments and broaden the sector coverage of the agreement will be undertaken over the next year," said a statement issued by the signatories.

Wen hailed the agreement as another achievement in China-ASEAN economic cooperation.

On November 4, 2002, then-Premier Zhu Rongji and ASEAN nation leaders signed a framework agreement that began the process of setting up a China-ASEAN free-trade zone.

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