The Japanese and Malaysian governments have unofficially decided to sign an economic cooperation pact centering on a bilateral free trade agreement in mid-December, Asian diplomatic sources said Saturday.

The two governments are in the final stage of negotiations, aiming for Prime Minister Junichiro Koizumi and Malaysian Prime Minister Abdullah Ahmad Badawi to sign the agreement during Asian summit meetings in Kuala Lumpur. Summit meetings of the Association of Southeast Asian Nations and of East Asian leaders are scheduled to begin on Dec. 12 in the Malaysian capital.

It will be Japan's third FTA after agreements with Singapore and Mexico, which have already been implemented.

The FTA talks with Malaysia were difficult, particularly over automobiles and steel products, due to Kuala Lumpur's policy of protecting its national carmakers.

But the prime ministers reached a basic agreement in May at their summit meeting in Tokyo.

Malaysia has promised to abolish tariffs on most mining and manufacturing products, including steel and automobiles, within 10 years of the FTA's implementation.