BRUSSELS (AFP) - Indonesia, Asia's leading exporter of timber to Europe, on Monday signed a long-awaited pact with the European Union to fight the trade in illegal timber, a driver of environmentally damaging deforestation.

The deal, negotiated over six years, aims to ensure that all Indonesian timber entering the EU is produced legally, and makes Indonesia the first Asian nation to enter such an agreement.

"This agreement is good for the environment and good for responsible business," said the EU's Environment Commissioner Janez Potocnik, who joined Indonesia's Minister for Forestry Hassan Zulkifli at the signing ceremony in Brussels.

Illegally harvested wood represents about 50 per cent of timber exported from Indonesia and 20 per cent of timber products imported into the EU.

Main destinations in Europe are Germany, Britain, the Netherlands, Belgium, France, Spain and Italy.

But an EU law introduced in March prohibits the sale of illegally harvested timber, meaning businesses must ask for evidence that products comply with the rules.

The deal has yet to be formally ratified by both sides, but once it is fully implemented, Indonesian timber products will be systematically checked for their traceability with the help of the EU.

It will boost the EU's Forest Law Enforcement Governance and Trade plan, part of global efforts to stop the illegal logging practices that are destroying the world's tropical forests.

Indonesia is home to the world's third-largest expanse of rainforests, after the Amazon and the Congo basin, and is often cited as the third biggest emitter of greenhouse gases, mainly caused by deforestation.

It has said demand for cheap timber products is one of the main reasons it struggles to control what is known locally as the "forest mafia".

The EU imported US$1.2 billion-worth (S$1.5 billion) of timber and paper from Indonesia in 2010, about 15 per cent of the country's total exports in the forestry sector.

Brussels first signed a similar accords with Ghana, followed by Cameroon, Republic of Congo, Liberia and Central African Republic.