TAIWAN and Singapore are to pursue a free trade agreement-style deal, officials from the two sides said yesterday.

Taiwan will negotiate with Singapore a deal under the World Trade Organization framework, Taiwan government spokesman Lo Chih-chiang said.

"We will pursue this deal. It's basically an FTA, though we may use a different name," Lo said.

"Singapore is an economic hub in Asia, and trade is Taiwan's lifeblood."

Singapore decided earlier yesterday to pursue the deal. A statement from Singapore's Taipei trade office said the two sides had "agreed to explore the feasibility" of an agreement under the WTO and would meet later in the year.

Both the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei) and Singapore were World Trade Organization members.

Singapore and Taiwan do not have official ties.

The agreement is said to be the first negotiation of its kind since the Chinese mainland and Taiwan signed the Economic Cooperation Framework Agreement in June.

Microchip components and petrochemical and machinery products stand to gain from an FTA as Taiwan's main exports to Singapore, its sixth-biggest trading partner with US$13.423 billion in two-way trade last year. Singapore ships similar items to Taiwan.

China yesterday urged relevant countries to continue adhering to the one-China policy and to prudently handle related issues.

Foreign Ministry spokeswoman Jiang Yu made the remarks when commenting on media reports of the Singapore and Taiwan discussions.

"Our stance on the economic and trade activities between foreign countries and Taiwan is consistent and clear," said Jiang.

"We hope relevant countries continue adhering to the one-China policy and to prudently handle related issues."

Also yesterday, in response to inquiries, a spokesman for the State Council Taiwan Affairs Office said: "We believe Singapore will adhere to the one-China policy, and properly handle its economic and trade relations with Taiwan accordingly.

"We also hope Taiwan will safeguard the current common political foundation formed across the Strait and safeguard the peaceful development of cross-Strait ties," he said.