China has reached agreement with the Association of Southeast Asian Nations, or ASEAN, on completely removing tariffs on merchandise goods by 2010 as part of a proposed free trade agreement, the Chinese Ministry of Commerce says.

The agreement on ending most tariffs was reached during a meeting last week in Beijing and will be signed at a China-ASEAN leaders' summit next month, the ministry said in a statement posted Tuesday on its Web site.

The two sides will begin to implement the tariff cuts from 2005, it cited ministry spokesman Chong Quan as saying.

China ranks the 10-nation ASEAN as its fifth largest trading partner, with two-way trade currently accounting for more than one-tenth of the country's annual total trade volume of more than $850 billion.

ASEAN includes Brunei, Cambodia, Laos, Vietnam, Indonesia, the Philippines, Singapore, Myanmar, Malaysia and Thailand.

The two sides have been negotiating details of a trade pact for several months. Last month, there was a breakthrough when ASEAN agreed to grant China market economy status.

Under global trade rules, granting market economy status to a country lessens the scrutiny applied to domestic pricing policies, a major factor in investigating unfair trade practices such as dumping.

Chong said China places a high degree of importance on developing and deepening its economic relations with ASEAN.

Free-trade agreements have become increasingly popular due to the slow progress of ongoing multilateral talks at the World Trade Organization with China in several negotiations with trading partners.

Australia and China are conducting a feasibility study on a proposed free-trade agreement. If the study is favorable, Australia will also have to decide whether to grant China market economy status before further negotiations can proceed.

Source: China Daily/agencies