The decision to open negotiations with Singapore, a leading member of the Association of Southeast Asian Nations (ASEAN), comes little more than a month after Taiwan signed the sweeping agreement with China in late June.

"Singapore has a key role in the foreign trade of ASEAN countries," Taiwan's economic ministry said in a statement. "The future trade agreement with Singapore can lay an important basis for Taiwan to further its trade and economic cooperation with ASEAN countries."

Taiwanese officials believe the June pact in effect means Beijing has given the nod to the island going ahead with similar agreements with other countries.

Singapore and Taiwan will "explore the feasibility of an economic cooperation agreement", the two said in a joint statement.

"Singapore can become an important bridge in our economic strategic planning so we can develop closer interaction with other trading partners," said Taiwanese presidential spokesman Lo Chih-chiang.

Singapore is Taiwan's sixth largest trading partner and maintains cordial ties with the island but like most countries officially recognises Beijing over Taipei.

Taiwan currently has free trade deals only with diplomatic allies Panama, Guatemala and Nicaragua but has been pushing for ties with major markets in order to avoid marginalisation by a growing number of regional economic blocs.

Such talks had been bogged down mainly by pressure from Beijing, which considers Taiwan part of its territory even though the island has governed itself since the end of a civil war in 1949.

Lai Shin-yuan, Taiwan's top China policy maker, said many had nations voiced interest in discussing free trade arrangements with Taiwan after it signed the China pact, known as the Economic Cooperation Framework Agreement (ECFA).

"Some progress" had been made on this front, she said in a speech in Washington Wednesday.

The ECFA "has refocused international attention on Taiwan's economic importance, and on its credentials for becoming a regional economic and trade hub," she said.

In response to Thursday's statement, China's Taiwan Affairs Office said "we believe Singapore will continue to stick to the one China policy, and thus properly handle economic and trade relations with Taiwan," state new agency Xinhua reported.

The one China policy states that there is only one China, covering both sides of the Taiwan Straits, and that Beijing has a right to rule this entity.

Taiwan and Singapore started free trade deal talks before 2000 but broke off under former president Chen Shui-bian, partly due to pressure from China and partly because of a dispute over how to refer to Taiwan.

Chen's government had said it would not negotiate under any name except Taiwan or the island's own official title, Republic of China.

Taiwan is registered at the World Trade Organisation under the designation "Taiwan, Penghu, Kinmen and Matsu customs territory".

The Democratic Progressive Party, now in opposition, poured cold water on the planned Singapore deal, saying Taiwan should set its sights on powerhouses such as the United States, Japan and the European Union.

"Such a deal can only be signed with China' consent.... It would put Taiwan's sovereignty at risk like the controversial ECFA," it warned in a statement.

Besides Singapore, Taiwan is eyeing a free trade agreement with Japan, its second largest trading partner after China, officials have said.

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