Trade ministers of countries from around the Pacific on Monday reached a deal on the Trans-Pacific Partnership (TPP) trade accord.
The trade liberalisation pact aims to cut trade barriers between the 12 countries while setting common standards.
The partnership will bring together countries that make up 40 percent of the world's economy and influence a wide range of industries, from medicine to the food industry.
The deal now must be approved by the legislative bodies of participating countries.
The TPP brings 12 nations from around the Pacific - the United States, Japan, Canada, Mexico, Australia, New Zealand, Singapore, Vietnam, Malaysia, Peru, Chile, and Brunei.
The United States and Japan, the world’s first and third largest economies respectively, are the leading actors involved in the TPP.
Speaking on the accord, Japanese Economy Minister Akira Amari said, "I am very pleased that we have been able to reach the outline of agreement today after tenacious negotiations as 12 countries believe in the future with TPP."
"With Pacific Trade Pact which builds the new 21st century trade and investment rules in a wide range of fields which are not limited to only the tariff elimination and reduction of goods, we build a huge economic bloc that trades freely in all sectors, such as people, goods, investments, information," Amari said.
The partnership is vital to US President Barack Obama’s strategic vision to counterbalance China’s increasing significance in the world economy.
“When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy,” Obama said in a statement after the deal was reached.
However, Obama will have a difficult task in pushing the agreement through the US Congress.
Most Democrat senators, led by Elizabeth Warren of Massachusetts, oppose the agreement, claiming it would encourage businesses to move overseas where they it would benefit from cheap labor and hurt middle class American workers.
“We cannot continue to run this country for the top 10 percent. We can't keep pushing through trade deals that benefit multinational companies at the expense of workers,” Warren has said, speaking against the deal.
If passed, the major trade accord would be a legacy making success for President Obama in the last 15 months of his term.
The agreement is the outcome of an eight year negotiation process which stumbled on several deal-breaking disagreements.
In early August the signing of the deal was stalled after various disputes emerged between the twelve countries party to the agreement over their dairy and car sectors as well as exclusivity periods for manufactured drugs.
However, the final round of talks reached compromises on these sectors.
Environmentalists and liberal activists argue the agreement risks environmental protection and hurts middle class workers by favoring big business and giving way to price gouging.
In defence of the deal, Canada's International Trade Minister Ed Fast called the pact “a once in a lifetime opportunity,” and said "We certainly don't anticipate that there will be job losses. Obviously, there will be some industries that will adapt, but what we've done is we've positioned Canada very strongly to be part of a much larger trade agreement.”
The White House said the details of the agreement will be made public as soon as possible. However, the accord’s full 30-chapter text is not expected to be available at least for a month.