ASEAN to sign improved China, internal trade deals as bloc weighs ‘bolder' moves to tackle US tariffs
KUALA LUMPUR: 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.'
As 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 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.'
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