The seven-nation BIMST-EC grouping, which has a combined population of 1.3 billion people, will sign the agreement today, said Thai Commerce Minister Watana Muangsook.

"I am convinced that our success in establishing the free trade area will greatly increase both our inter-regional and intra-regional trade," he said as he opened the afternoon discussions.

"It is clear that we are yet to tap into our enormous potential and resources, and for this to happen, we will need to establish a more substantive and meaningful economic framework."

Negotiations to complete the deal are expected to take about 18 months, allowing trade liberalisation to begin in mid-2005.

BIMST-EC's more developed members, Thailand, India and Sri Lanka, are expected to pledge to cut tariffs to zero by 2012 while the two less-developed members, Bangladesh and Myanmar, are to be given an additional five years.

The trade ministers' meeting is also expected to produce agreements on tighter cooperation in six areas -- trade and investment, science and technology, communication and transport links, tourism, energy and fisheries.

BIMST-EC (Bangladesh, India, Myanmar, Sri Lanka and Thailand -- Economic Cooperation) was initiated seven years ago by Thailand as part of its "look West" policy.

Sri Lanka proposed the free trade pact between the five nations a year ago at the group's first ministerial meeting in Colombo.