Both sides were discussing an "early harvest" package of products to be initially covered under the ASEAN-China Free Trade Agreement, whose creation was agreed on in the Cambodian capital last year during the ASEAN leaders' summit, officials said.

The ASEAN-China FTA is to create a market of 1.7 billion consumers with a combined gross domestic product of 2.0 trillion dollars and total trade of 1.23 trillion dollars.

It would be the biggest free trade zone of its kind in the world when it is realized in 2010.

"The FTA is designed to attract investment in that it would not matter much if an investor locates his factory in China, in the Philippines or any other part of ASEAN," Philippine Trade Secretary Manuel Roxas told AFP.

"By having an FTA, his product can enter China without really having to locate to China, for example. This is really an effort to make ASEAN and its members much more attractive."

ASEAN-China trade reached 55.4 billion dollars in 2001, significantly higher than the 8.9 billion dollars a decade ago, official figures showed.

Between 1993 and 2001, two-way trade grew by an average of 25.7 per cent annually, while initial studies suggest that this would be pushed significantly higher once the FTA is fully in place.

The aim is to have the six senior or original ASEAN members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- fully implement the FTA with China in 2010.

Newer members Cambodia, Laos, Myanmar and Vietnam would be given five more years to join, officials said.

Any agreement to be reached in talks here in Phnom Penh is expected to be transmitted to ASEAN leaders for approval when they meet for their annual summit in Bali, Indonesia next month.