Pakistan and Afghanistan on Sunday signed a landmark trade agreement that has been heavily promoted by the United States.

U.S. Secretary of State Hillary Clinton, who is in Pakistan for a two-day visit, looked on as the Pakistani and Afghan commerce ministers sealed the deal in Islamabad.

The U.S. special representative for Afghanistan and Pakistan, Richard Holbrooke, called the agreement "a vivid demonstration of the two countries coming together" - which, he said, has been a goal of the Obama administration "from the beginning."

The pact, which has been under negotiation for years, will facilitate the ground shipment of goods between the two neighbors.  It must still be ratified by the Afghan parliament.

On Monday, Secretary Clinton is due to meet with top Pakistani military and civilian leaders and is expected to announce new development programs for Pakistan that will focus on water, energy and public health projects worth $500 million.   

The programs are part of a $7.5 billion package approved by the U.S. Congress last year that triples non-military aid to Pakistan over a five-year period.  The programs are designed to help combat anti-American sentiment that runs deep in Pakistan.     

From Pakistan, Clinton will travel to Kabul to attend an international donors conference on Afghanistan Tuesday.  

Representatives from 70 countries will attend the gathering, which is to focus on steps to reintegrate insurgents into society and crack down on widespread corruption.

U.S. officials hope the conference will highlight the Afghan government's plan to improve governance and stability.

Britain is expected to announce a 40 percent increase in development aid to Afghanistan.

Some information for this report was provided by AP, AFP and Reuters.