Leaders of 10 Southeast Asian nations signed a landmark accord yesterday aimed at wrestling their disparate region into a European-style economic community by 2020.

The blueprint, dubbed the Bali Concord II, envisions a single market eliminating tariff and non-tariff barriers within an economic grouping encompassing 500 million people and annual trade totaling US$720 billion.

"We have just witnessed a watershed in the history of ASEAN," Indonesian President Megawati Sukarnoputri said. "It will make it possible for our children and their children to live in enduring peace, stability and shared prosperity."

Leaders of the Association of Southeast Asian Nations gathered for a two-day summit on this resort island.

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

The summit's ASEAN-only portion closed yesterday, but the group was holding meetings involving China, Japan and South Korean before the summit's close today.

The accord signed yesterday sets deadlines for lowering tariffs and travel restrictions. It aims to create by 2020 the ASEAN Economic Community, modeled on European integration of the 1960s and 1970s - before the advent of the European Union.

The asean leaders also were expected to move closer to a free trade agreement with China.

It would eventually create a market of 1.7 billion consumers with a combined gross domestic product of US$2 trillion - the biggest free trade zone in terms of population.

The bali venue was chosen to show that the region will not be cowed by the terrorists who blew up two nightclubs a year ago, killing 202 people.

Asean leaders also are discussing setting up a security community alongside the economic one, though without any formal military alliance like NATO. Terrorism, along with SARS and lingering effects of the Asian financial crisis, has dragged down regional economies.

Speaking at the ASEAN Business and Investment Summit, Chinese Premier Wen Jiabao said that China is "a good neighbor and a good partner."

"A more developed and a stronger China will bring about development opportunities and tangible benefits to other Asian countries," he said.

This is because firstly, he explained in his speech, it is a firm policy of China to vigorously promote Asia's development, rejuvenation, peace and stability.

Secondly, China's development will bring tremendous immediate and long-term benefits to Asian countries. And thirdly, China's growth adds to the peaceful forces and could contribute more to regional stability.

Wen said that China and ASEAN officially launched negotiations to establish a Free Trade Area in 2002, and positive headway has been made in the talks in the past year. He expressed his confidence that the Free Trade Area will be established by 2010.