The leaders of China, Japan and South Korea, three of Asia's biggest economies, have agreed to begin talks this year for a free-trade agreement.
The three leaders also signed a trilateral investment agreement, at a summit in Beijing yesterday.
China is the biggest trading partner of both Japan and South Korea.
As with other free-trade agreements between countries, this one could still face long negotiations and trade barriers.
Chinese Premier Wen Jiabao said the pact would help the nations in a time of rising trade protectionism.
Meanwhile, Japanese Prime Minister Yoshihiko Noda said economic co-operation was essential to maintaining the Asia-Pacific region as the growth centre of the world economy.
Trade between the three countries reached $690 billion in 2011.