ASEAN agrees to lower barriers to boost regional trade: WEF calls it a ‘game changer’

Southeast Asian leaders have endorsed trade and economic reforms to boost regional integration in response to geopolitical tensions and fresh US tariff shocks that threaten export-driven economies in the region.

The decisions came during the opening of a regional summit in Malaysia on Monday, the first high-level meeting since Washington imposed steep new tariffs on ASEAN exports on April 2. 

The 10-member bloc approved an upgraded version of the ASEAN Trade in Goods Agreement (ATIGA) and adopted a bold 20-year economic roadmap known as the ASEAN Community Vision 2045.

New trade deal to cut barriers and modernize customs

According to Nikkei Asia, negotiations on the upgraded ATIGA have been concluded, and the formal signing is expected at ASEAN’s October summit. The revised agreement could lower residual tariffs and dismantle non-tariff barriers that strangle the “free movement” of goods across borders.

Malaysian Trade Minister Zafrul Aziz called the agreement the “cornerstone” of ASEAN’s economic integration, saying the bloc has ambitions of a seamless intra-regional trade environment. 

“The upgraded version features forward-looking and commercially meaningful provisions to boost regional trade, enhance supply chain resilience, and deepen intra-ASEAN integration,” Zafrul reckoned.

90% of goods already cross borders tariff-free, but economists say the deal removes outdated customs procedures, inconsistent documentation, and a framework that currently requires products to meet strict local content thresholds to benefit from tariff breaks.

Officials want to ease some of these value-added thresholds, though the final details are still under discussion. The agreement also introduces the standardized electronic exchange of trade documents, expected to simplify customs clearance and cut transaction costs.

“Further digitalization is expected to reduce trade costs within the ASEAN region,” Kyohei Yabu of the Japan External Trade Organization from JETRO’s Bangkok office noted.

World Economic Forum hails agreement

The World Economic Forum (WEF) has coined ASEAN’s digital element of the agreement as a “game changer” for the region’s economic growth. The Forum referred specifically to DEFA, a digital economy framework agreement in ASEAN’s economic strategy.

“DEFA is a strategic blueprint for how our nearly 680 million people can access a digital future that is open, secure, and inclusive,” said the WEF. DEFA includes initiatives for skills development, digital literacy, and talent mobility.

According to WEF figures, 71% of all venture capital deals in the region in 2023 were tied to the digital economy, outpacing the global average by 11%. Annual investments in communications and data services surged from $777 million in 2015 to $4.4 billion in 2024.

The Forum said DEFA’s implementation will accelerate this momentum and open doors for women entrepreneurs, rural innovators, and youth-led startups.

Tariffs from Washington are affecting Asian markets

President Donald Trump’s administration’s “reciprocal” tariffs in April targeted ASEAN exports. The new duties range from 10% on Singaporean goods to 49% on Cambodian and Laotian products.

The protectionist trade policy rattled markets across Southeast Asia, especially export-dependent economies like Malaysia, Singapore, and Thailand. Regional leaders are now scrambling to protect their economies and consumer expenditure from fallout with eased internal trade structures.

“A transition in the geopolitical order is underway, and the global trading system is under further strain with the recent imposition of US unilateral tariffs,” warned Malaysian Prime Minister Anwar Ibrahim in his opening address at the meeting. “Protectionism is resurging as we bear witness to multilateralism breaking apart at the seams.”

Anwar revealed he had written to Trump, proposing a meeting between the US president and ASEAN leaders to calm heads. The proposed summit could be held as early as October, though no date or location has been finalized. 

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