ASEAN is under the shadow of US-China trade row

When the 10 leaders of the Association of Southeast Asian Nations, or ASEAN, gather in Malaysia next week, the organization will address its challenges head-on. It will take place during one of the only times a large number of reporters cover the regional trading bloc. 

Like all major ASEAN summits, it will end with promises of greater regional collaboration, and a set of shared goals in many policy areas. 

But in an age of internal divisions, the group’s leaders will not release a final joint statement, according to Malaysian Foreign Minister Mohamad Hasan. There will still be some notable activity, however. 

During the summit, ASEAN will formally admit its 11th member, Timor Leste, and it will probably announce the final steps on a new digital framework. 

It will serve a central role in a meeting of nations in the massive Regional Comprehensive Economic Partnership, or RCEP, trade deal – the largest in the world. It will also be the venue for the broader East Asia Summit, which President Donald Trump will attend. 

Civil war

But ASEAN’s limitations remain clear. Wars in Southeast Asia have spread beyond strife-torn Myanmar this year, and the bloc has continued to reflect its weakness in mediating conflict that continue to harm the entire region and the world. 

As civil war continues to rage in Myanmar, its collapse as a state has negatively affected its neighbors. It has become a hub of organized crime and has spread disease and refugees into Thailand and beyond. 

Another two members of ASEAN, Cambodia and Thailand, clashed during the summer over a disputed border area until pushed to stop by China and the United States. Trump will attend the summit to preside over the Cambodian-Thai ceasefire signing ceremony. 

Malaysia, which is ASEAN’s chair, played a significant role in the ceasefire as well – not because of the organization, but because of Prime Minister Anwar Ibrahim’s influence over Cambodian and Thai leaders. 

He has a level of personal ties that helped broker the end of the border conflict. His personal staff worked with the US, Cambodia, China, and Thailand, and they made no effort to use ASEAN officials in a serious way to come to a ceasefire. 

Still, the organization has struggled to remain regionally relevant as Southeast Asian states have found it harder to avoid US-China tensions. 

In addition, both Trump and his predecessor, Joe Biden, have placed greater weight on using the Quad as a regional strategic force. None of these Southeast Asian states belong to to this security partnership that includes Australia, India, Japan and the US. 

Beyond its own internal conflicts, ASEAN has no coherent approach as it is caught in the middle of international tensions. 

Normally reluctant to show they are picking sides between giants – with some exceptions, such as the Philippines or Laos leaning toward Washington or Beijing – Southeast Asian countries have been pushed by the two superpowers to abandon this premise. 

Free trade

China’s activities in the South China Sea – along with its close ties with many mainland countries in ASEAN – have driven a wedge in the organization. This has made it all but impossible for the group to collectively do anything related to Beijing’s aggressive behavior. 

Economically, the bloc, which had played a central role in East Asian integration including the creation of RCEP, has become less consequential as regional free trade expansion has given way to growing protectionism around the world. 

ASEAN’s role as the center of trade liberalization – its major focus for decades – has become much harder under shifts to American-Southeast Asian tariff deals and China’s growing controls on some of its exports. 

Overall, the US-China trade war has dominated the global economy. It has become such a focus that, while Trump is planning to attend the East Asia Summit, the world is primarily focused on whether he will meet directly with Chinese leader Xi Jinping during his trip.

ASEAN nations have also made promises to both superpowers that could put off near-term problems but are hard to keep. This situation is likely to anger either Washington or Beijing. 

The White House’s use of reciprocal tariff threats, its trade leverage over Southeast Asian states, and each major regional exporter’s desire to cut a deal caused all ASEAN countries to make their own agreements with Washington last summer. 

These deals tried to avoid the worst possible effects for each country in the short term, but they lack longer-term vision from any of the major Southeast Asian states. 

The each-country-for-themselves approach demonstrated that there is no unity in ASEAN in the face of hard economic challenges. 

Major exporters

What’s more, these deals involving transshipped goods, most of which come from China, pushed ASEAN countries into becoming part of the United States’ global efforts to wall off Chinese exports – at least on paper. 

In reality, the bloc remains economically dependent on Beijing, and these nations will probably be unable, or unwilling, to play the role the White House wants. 

The tariff measures are also unpopular with the Southeast Asian public as they are likely to reduce growth among the region’s major exporters. 

In Malaysia, for instance, Bloomberg recently reported that the country’s exports failed to meet expectations due to US tariffs that began in August. While Malaysia’s Investment, Trade, and Industry Ministry reported that exports rose 1.9% in August compared to a year earlier. 

Bloomberg noted that this was “lower than the 3% median estimate” it had in a survey. The decline also reflected US shipments falling “16.7% on year, while imports declined 36.7%. Trade with its major trading partner slumped by 25%.”

In Thailand, exports to the US are projected to contract by 12.7%, with key sectors – automobiles, electronics, and food products, including both agricultural and meat – vulnerable to decline, according to the United Nations Development Program. 

And yet, while these countries made deals with the White House that to some extent target and punish Chinese transshipped goods, the bloc will probably announce an expanded trade agreement with Beijing at its summit – the ASEAN-China Free Trade Area Version 3.0. 

Strategic issues

As Malaysian Foreign Minister Mohamad said at a media briefing, according to the New Straits Times, the agreement would streamline and ease trade between China and ASEAN nations:

We want all ASEAN nations to have the same trade terms with China. We don’t want a situation where one country can get this and another that.  

Unfortunately for the group, while the 3.0 version of the trade deal will almost surely go through, a vision of ASEAN states collaborating on the biggest economic or regional strategic issues still seems like a fantasy. 

Joshua Kurlantzick is a senior fellow for Southeast Asia and South Asia at the Council on Foreign Relations.

This edited article was published by the Council on Foreign Relations under a Creative Commons license. Read the original here.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.