The Association of Southeast Asian Nations (Asean) and the US have agreed to develop economic co-operation, but failed to make progress on a free trade area.

In a joint statement, Asean ministers "agreed to adopt an ambitious work programme designed to expand further the close trade and investment relationship between Asean and the US".

But US Trade Representative Robert Zoellick said after the talks, the first formal discussions between the US and Asean in 10 years, that it was "far too premature to talk" about preparations for a free trade area.

"While we are pleased to work towards free trade with all the countries in the region, we need to do so in a step-by-step approach," Mr Zoellick said.

Asean groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, an area with a population of 500 million people.

The region is Washington's fourth largest trading partner.

Pan-Pacific free trade

Thai Commerce Minister Adisai Bodharamik said he predicted a US-Asean free trade area could launch "within 10 years".

Mr Zoellick called the Asean region "extremely important to the US, in both strategic and economic terms".

Two-way trade between the US and Asean has tripled over the past decade to about $120bn, with the US running a $32bn trade deficit with the region, he said.

Asean has also sought closer economic ties with regional economic giant China and India.

Currency deal

Future meetings are set to discuss on the 'Chiang Mai Initiative' to link the reserves of Asean countries with those from China, South Korea and Japan.

At a meeting in November in Brunei, ministers agreed to swap currency reserves to prevent any repeat of the speculative currency meltdown that shook the region in 1997 and 1998 and triggered the Asian economic crisis.

Asean secretary general Rodolfo Severino said ministers would announce a summary of the currency swap agreements to date on Saturday.

The currency swaps could eventually become a formal Asian Monetary Fund, officials said Friday.

The idea of an Asian Monetary Fund is vehemently opposed by the US, which insists the International Monetary Fund should remain the only lender of last resort in the event of financial shocks.