Susannah Patton, director of the Southeast Asia Program at Australia’s Lowy Institute, said that economics was the foundation for power in the region.
“Ultimately, economics is king in Asia,” she said. Nonetheless, she also acknowledged that other engagements, such as in defence and culture, also exist.
“It is one reason why China’s influence in the region has been growing — because China has strong trade and economic relationships with almost all countries in Asia,” Patton told FMT on the sidelines of the 38th Asia Pacific Roundtable.
While Asean has responded to geopolitical pressures by exploring new partnerships — such as with Europe, Latin America, or BRICS — Patton emphasised that stronger integration within the bloc is an equally critical strategy.
“Trade within Asean has been steady for the last decade or more. Even though, notionally, there is this idea of an Asean Economic Community, most people agree that it is not a reality,” she said.
“Asean members have removed a lot of tariff barriers on each other. But they have not removed a significant number of non-tariff barriers, which still prevent economic integration among Asean countries,” she added.
Denis Hew, senior research fellow at the Lee Kuan Yew School of Public Policy, echoed the need for Asean to bolster economic integration, particularly as Southeast Asia faces challenges such as trade wars.
In April, the US imposed tariffs on a long list of countries, including Malaysia. Since then, the White House has dialled down on tariffs from 24% to 10% for Malaysia.
On June 12, however, US president Donald Trump warned that Washington might once again readjust tariffs unilaterally before the original July 9 deadline he set.
“Many countries in Asean don’t really have the economic power to fight back. The European Union (EU) can because they’re much more integrated,” Hew said. “The EU was preparing to retaliate against the US with their own list of reciprocal tariffs.”
Hew, former policy unit chief of the Asia-Pacific Economic Cooperation, said greater economic integration was not about becoming the next EU but strengthening Asean’s resilience and negotiating hand even if retaliation was not preferred.
“The idea is to create a single market and production base,” he said.
“It’s not the EU-style market, but what you’re trying to do is to get different Asean countries to work together and build on their comparative advantages to create an industrial platform that can be an alternative to big markets such as China.
“Asean is potentially a big market, but it can also be a platform for investments. The big focus now is to address the challenges and to implement what we have already written down (in the Asean Economic Community documents),” Hew added.
Bilateral basis
With Washington yet to take up the proposal to host a dedicated US-Asean Summit this year, Hew expects the Trump administration to only engage with Southeast Asia on a bilateral basis, rather than Asean as a whole.
“I don’t think President Trump is really interested in Asean right now. He is probably not interested in what we’re doing in terms of creating an economic community. He is only interested in working with the various Asean countries (individually), particularly those which he or the US thinks are strategically important,” he said.
Beyond the tariff talks, Patton noted that Asean’s dialogue partners — which range from the US to Australia — will similarly pursue greater bilateral relations going forward.
“It’s really important for dialogue partners to engage Asean as a group — through the Asean Summit, the meetings, and the processes like the East Asia Summit and Asean Regional Forum,” she said.
“But probably the more important part of engaging with Southeast Asia is the individual bilateral relationships that Australia or the US, have.
“Although Asean is important to a large extent, many external partners will approach the region through the prism of bilateral relationships, looking at which partners they can work with most effectively and where there is an alignment of interest,” she said.
According to Patton, this fits Southeast Asia’s parallel tendency for non-alignment as well, extracting the most benefits from all the different partners and retaining flexibility for manoeuvring.
The Asia-Pacific Roundtable, organised by Malaysia’s Institute of Strategic and International Studies, is one of the region’s leading forums on security, economic and geopolitical affairs.
Issues of Asean’s cohesion and economic integration are also expected to carry over into the upcoming Asean Foreign Ministers’ Meeting, which will be held from July 8 to 11 in Kuala Lumpur.