JAKARTA, Dec. 30 (AFP) – China and Southeast Asia establish the world's biggest free trade area (FTA) on Friday, liberalizing billions of dollars in goods and investments covering a market of 1.7 billion consumers.

Eight years in the making, the ASEAN-China FTA will rival the European Union and the North American Free Trade Area in terms of value and surpass those markets in terms of population.

Officials hope it will expand Asia's trade reach while boosting intra-regional trade that has already been expanding at 20 percent a year.

''In 2010 we are sending a strong signal that ASEAN is open,'' H.E Sundram Pushpanathan, of the Association of Southeast Asian Nations (ASEAN), told AFP.

China has just overtaken the United States to become ASEAN's third largest trading partner, and will leap Japan and the EU to become ''number one'' within the first few years of the FTA, said Pushpanathan, Deputy Secretary-General for the ASEAN Economic Community.

Under the agreement, China and the six founding ASEAN countries – Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand – are to eliminate barriers to investment and tariffs on 90 percent of products.

Later ASEAN members, including Vietnam and Cambodia, have until 2015 to follow suit.

Zhang Kening, the director-general of the department of international trade and economic affairs in Beijing, said the average tariff rate China charged on ASEAN goods would be cut to 0.1 percent from 9.8 percent.

Average tariffs imposed on Chinese goods by ASEAN states will fall to 0.6 percent from 12.8 percent.

ASEAN-China trade has exploded in the past decade, from 39.5 billion dollars in 2000 to 192.5 billion last year, Pushpanathan said.

At the same time, ASEAN-China trade with the rest of the world has reached US$4.3 trillion, or about 13.3 percent of global trade.

Teng Theng Dar, chief executive of the Singapore Business Federation, said sectors likely to reap the most benefits from the FTA included services, construction and infrastructure, and manufacturing.

''Other than product and service innovations, this is one great new business opportunity for the establishment of a regionally-based innovative supply chain for market reach and growth,'' he said.

Officials said there was more to the deal than sating China's thirst for Asian raw materials like palm oil, timber and rubber, and opening up regional markets for its manufactured products, steel and textiles.

''China and ASEAN countries are all export-oriented economies. A large proportion of our products target the US and EU markets... Generally neither side took the other's market as its most important target market,'' Zhang said.