US Trade Representative Robert Zoellick and Malaysia's Minister of International Trade and Industry Rafidah Aziz signed the Trade and Investment Framework Agreement (Tifa), which could lead to a bilateral free trade pact.

The (Tifa provides for the creation of a joint council to expand and liberalize trade and investment, including tackling trade barriers and other issues seen hampering free trade.

Aside from Malaysia, the United States has Tifas with four other members of the Association of Southeast Asian Nations (Asean) -- Indonesia, the Philippines, Thailand and Brunei.

The other Asean members are Cambodia, Laos, Myanmar, Singapore and Vietnam.

Washington has already signed a free trade agreement with Singapore and is discussing one with Thailand.

"We look forward to working closely with Malaysia to further strengthen our economic relationship bilaterally and within Asean," Zoellick said. "This Tifa provides a useful forum to discuss ways to address bilateral trade issues."

He said the United States wanted to enhance trade with resource-rich Malaysia, which was seeking to diversify its rapidly-growing economy.

Malaysia is the 10th largest trading partner of the United States.

On the other hand, the United States is the largest single market for Malaysia.

Their political ties however are not as cosy as in the business and trade fields. Predominantly-Muslim Malaysia has been a sharp critic of the US-led invasion of Iraq and has attacked Washington for its policy on the Israel-Palestine conflict.

Among areas that the two countries would look into under the trade agreement are intellectual property, information and communications technology, biotechnology policy, tourism and boosting small- and medium-sized enterprises.