Association of Southeast Asian Nations (Asean) secretary general Ong Keng Yong told AFP the signing is expected to take place when the regional bloc's annual summit is held in Singapore.

The national leaders of Asean 's dialogue partners China, Japan and South Korea will also attend the summit as part of the Asean Plus Three process.

"The target is for the agreement to be signed at the summit in Singapore in November," Ong told AFP by telephone from Brunei after a meeting there between Japan's Trade Minister Akira Amari and Asean economic ministers.

Ong said however that both sides still have to settle certain "modalities" in the agreement, including which products would covered and which items will be put on the so-called sensitive and exclusion lists.

"We managed to close the gap on the issue of modality. Now, we need to go back home and settle the internal requirements ... so that we can start actual negotiations very soon," he said.

A progress report on the negotiations will be heard when the economic ministers meet in Manila in August, Ong said.

Japan is keen to strike a free trade deal with Asean, a market of 500 million people which is also strengthening its economic links with China and South Korea.

Asean and China signed a framework agreement on comprehensive economic cooperation in 2002 and are expected to form a bilateral free trade area by 2010, which would cover nearly two billion people.

In May last year, South Korea signed a free trade agreement with Asean.

Asean member Thailand opted out of the pact due to some disagreements but could sign on later.

Asean groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Singapore is due to take over the group's revolving chair from the Philippines in July.