Leaders of 10 Southeast Asian nations ranging from fledgling democracies to an absolute monarchy signed a landmark accord Tuesday aimed at wrestling their disparate region into a European-style economic community by 2020.

South Korean President Roh Moo-hyun, center, holds hands with Chinese Premier Wen Jiabao, left, and Japanese Prime Minister Junichro Koizumi, right, prior to a tri-lateral summit talk, at the Hyatt Hotel in Bali Island, Indonesia, Tuesday, Oct. 7, 2003. They came here to attend the 9th Asean Summit plus three (Japan, South Korea and China) meeting. [AP]

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 $720 billion.

"We have just witnessed a watershed in the history of ASEAN," Indonesian President Megawati Sukarnoputri said.

The Association of Southeast Asian Nations wants to band together to counter the burgeoning economic might of India and China, Asian powerhouses that are siphoning off investment and trade seen as essential for Southeast Asia's development.

Leaders who gathered for a two-day ASEAN summit on this resort island acknowledged that the diversity of governance — which also includes communist autocracies and a military dictatorship — will complicate efforts to emulate European integration.

Talks leading up to the annual summit were soured by the Myanmar military government's continued detention of democracy campaigner Aung San Suu Kyi.

Despite ASEAN's tradition of staying out of domestic affairs, member countries pushed for Suu Kyi's pre-summit release from house arrest as a goodwill gesture — but without success. Once the summit began, the leaders wanted to focus on economics, rather than politics, and backed away from criticizing Myanmar about Suu Kyi.

Speaking at a parallel business summit on Tuesday, Japanese Prime Minister Junichiro Koizumi said the region should not shy away from discussing political issues.

"A sound political environment is indispensable to ... expand trade and investment. The countries of this region should offer each other advice and assistance to resolve any difficulties that they face in the political realm," Koizumi said.

The summit statements promise to set up a network of free trade zones across Southeast Asia and set deadlines for lowering tariffs and travel restrictions. They aim to create by 2020 the ASEAN Economic Community, modeled on European integration of the 1960s and 1970s — before the advent of the European Union (news - web sites).

At the ASEAN business summit, delegates noted that Southeast Asia, a star performer of the global economy until the 1997-98 Asian financial crisis, is now attracting only a fifth of what China is receiving in foreign investment.

About 75 percent of direct American investment in East Asia went to nations in Southeast Asia a decade ago — but that figure has plunged to 10 percent as companies now put 80 percent of that money into China, Ernest Z. Bower, president of the US-ASEAN Business Council, told ASEAN finance ministers in August in Manila, Philippines.

During their two-day summit ending Wednesday, the ASEAN leaders also were expected to move closer to signing a free trade agreement with China that will eventually create a market of 1.7 billion consumers with a combined gross domestic product of $2 trillion — the biggest free trade zone in the world in terms of population.

India and Japan also were hoping to sign free-trade agreements with ASEAN within the next decade.

The Chinese premier, as well as the leaders of India, Japan and South Korea (news - web sites), were attending the summit on Bali — a venue chosen to show the region will not be cowed by the terrorists who blew up two nightclubs here 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 (news - web sites). Terrorism, along with SARS (news - web sites) and the Asian financial crisis, has been a large drag on regional economies.

During the business summit Tuesday, Chinese Premier Wen Jiabao said his country 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.

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