The regional
bloc has concluded negotiations to upgrade agreements that target easier trade
- not just within the grouping itself, but also with its top economic partner,
China.
Easier trade
among members of the Association of Southeast Asian Nations (ASEAN) as well as
with the regional bloc’s top economic partner, China, is on the horizon as the
grouping pushes ahead with “bolder” moves to stave off the threat of steep US
tariffs.
ASEAN has
concluded negotiations on upgrading the ASEAN Trade In Goods Agreement (ATIGA)
and the China-ASEAN Free Trade Area (CAFTA), with the enhanced deals set to be
signed in October, Malaysia’s Investment, Trade and Industry Minister Tengku
Zafrul Abdul Aziz told reporters on Sunday (May 25) ahead of the 46th ASEAN summit.
“We remain
confident that these milestones will serve as a pivotal enabler for ASEAN's
sustained growth and competitiveness,” Tengku Zafrul said after chairing an
ASEAN Economic Community Council Meeting.
“The successful
conclusion of these negotiations is expected to enhance the region's economic
integration and generate significant economic benefits for ASEAN as we continue
to navigate an increasingly volatile global economic landscape.Top of Form
Bottom of FormAs the
rotating chair for ASEAN this year, Malaysia has urged the bloc to diversify
its trading partners in the face of sweeping tariffs imposed by US President
Donald Trump.
Speaking on
Sunday, Tengku Zafrul warned the bloc against staying still at a time of
economic uncertainty.
“ASEAN would
need to break away from a business-as-usual approach,” he said.
“We need to
adopt bolder, more agile and more forward-looking strategies. We need to
safeguard and advance ASEAN socioeconomic interests.”
ASEAN has
reaffirmed its commitment to stand by the principles of multilateralism
and a rules-based global trading order, even as it continues to maintain a
policy of non-retaliation against the US tariffs, Tengku Zafrul said.
“We don't plan
to have any measures that will represent a retaliation to what has been
introduced,” he said.
Tengku Zafrul
said every ASEAN member is a “sovereign nation” and should be supported in
pursuing bilateral tariff negotiations with the US.
“But it's
important that in all these meetings, we also reiterate the ASEAN position,” he
added.
At the summit on
Monday and Tuesday, ASEAN is expected to explore the expansion of regional free
trade agreements alongside engaging other economic blocs and dialogue partners,
measures which Tengku Zafrul said were discussed at the economic council
meeting.
FACILITATING
TRADE WITHIN ASEAN
“We also
discussed how ASEAN can improve trade within,” the minister added, noting that
intra-ASEAN trade accounts for approximately 23 per cent of the bloc's total
trade.
“There's a lot
of room for improvement. When we look at other economic blocs, they trade with
each other internally more than what ASEAN is doing today.”
ATIGA is aimed
at achieving a free flow of goods between ASEAN member states, resulting in
lower business costs, increased trade, and a larger market and economies of
scale for businesses.
The upgraded
agreement targets the further lowering of tariffs and the removal of non-tariff
barriers among member countries.
It will feature
“forward-looking and commercially meaningful provisions aimed at further
boosting regional trade, enhancing supply chain resilience, and also boosting
deeper economic integration within ASEAN”, Tengku Zafrul said.
Singapore, which
chaired the upgrade negotiations, said it will continue to work with ASEAN and
global partners to secure the bloc's long-term growth, competitiveness, and
shared prosperity.
The successful
conclusion of the upgrade negotiations "demonstrates ASEAN’s commitment to
building a more seamless and resilient economic region, as well as to preserve
a rules-based trading environment to better support businesses’ operations in
the ASEAN region amidst an uncertain global economic climate", Singapore
Trade and Industry Minister Gan Kim Yong, also the country's deputy prime
minister, said in a statement on Sunday.
Earlier on
Sunday, Malaysia’s Foreign Minister Mohamad Hasan highlighted that ASEAN
nations are among those most heavily hit by US tariffs.
“We must seize
this moment to deepen regional economic integration, so that we can better
shield our region from external shocks,” he said in opening remarks at a
meeting of ASEAN foreign ministers.
The US-China
trade war is “dramatically disrupting” production and trade patterns worldwide,
Mohamad said, cautioning that a global economic slowdown was likely to happen.
TAKING
ASEAN-CHINA TRADE FORWARD
ASEAN is China's
largest trading partner, with the value of total trade reaching US$234 billion
in the first quarter of 2025, according to Chinese customs data.
The so-called
3.0 version of CAFTA will "promote the deep integration of the production
and supply chains of both sides", China's commerce ministry said in a
statement on Wednesday, when it announced the completion of negotiations.
The upgraded
pact will also “inject greater certainty into regional and global trade and
play a leading and exemplary role for countries to adhere to openness,
inclusiveness and win-win cooperation”, the ministry said.
China has
intensified engagement with ASEAN since Trump announced hefty import tariffs on
countries around the world and targeted China with even heavier levies. Some of
the levies have since been delayed while China and the US agreed this month to
pause some of their tariffs.
In his Sunday
remarks, Mohamad described ASEAN as a region where geopolitical ambitions, as
well as economic and security interests, intersect.
“External
pressures are rising, and the scope of challenges has never had higher stakes,”
he said, stressing that ASEAN unity is now “more important than ever”.
“It is therefore
crucial that we reinforce the ties that bind us, so as to not unravel under
external pressures.”
Source: Channel
News Asia (published 25/5/2025)
June 30, 2025
