Strengthen ASEAN Centrality To Withstand US Tariff Shock – Don

By Abdul Hamid A Rahman

KUALA LUMPUR, April 6 (Bernama) -- As the United States, under President Donald Trump, moves to reshape the global trading system to its advantage, Malaysia's role as ASEAN chair in 2025 will be critical in charting the bloc’s next stage of economic growth.

Sunway University’s Jeffrey Cheah Institute on Southeast Asia head, Professor Shandre Mugan Thangavelu, said ASEAN is at a crucial juncture to uphold its shared vision of growth, economic cooperation and regional integration for sustainable development.

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“It is timely for Malaysia, in its chairmanship role, to reiterate the enduring ASEAN principles and policy stance in responding to the Trump administration’s unprecedented tariff shock to the global economy in general, and to ASEAN specifically.

“Its leadership in coordinating policy stances and responses will be crucial to counter Trump’s reciprocal tariffs in a strategic and effective manner,” he told Bernama.

The don said the key for ASEAN member states is to maintain and strengthen ASEAN centrality through a shared vision of growth.

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“Individual responses to Trump’s reciprocal tariffs will highlight the need to reinforce ASEAN centrality, particularly through multilateral free trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the ASEAN Economic Community (AEC),” he said.

Shandre noted that RCEP, as the world’s largest free trade agreement, provides a rule-based and institutional framework for sustainable economic development in East Asia.

“As a ‘living’ agreement, the RCEP Joint Committee can expand the regional integration agenda to address key contemporary issues such as environment and climate change, skills development, green transformation, and the development of digital and smart urban centres.

“In negotiations with the Trump administration, the institutional features of RCEP can also support progressive liberalisation of regional and global trade and address non-traditional issues beyond trade and investment. Setting up the RCEP Secretariat is critical to coordinate these efforts,” he said.

The professor also said negotiations must consider new and emerging technologies such as artificial intelligence (AI), robotics, electric vehicles, autonomous technologies and space technologies – areas where the US holds a competitive edge and ASEAN could provide improved market access.

“These technologies are creating new service sectors and global value chains (GVCs), enabling greater participation by small and medium enterprises (SMEs) in both regional and global production networks.

“ASEAN should also nurture next-generation GVC firms that are agile and capable of moving into higher value-added segments in manufacturing and services,” he said.

He emphasised that domestic firms must understand how to ‘unbundle’ their production structures – a key part of the second stage of GVC development involving the international division of labour – to build more resilient and responsive supply chains.

Shandre said the next phase of ASEAN growth will be driven by the digital and green economy, which also presents opportunities to reduce US trade deficits with the region.

He called for enhanced regional cooperation to help firms undergo structural transformation through digital and green technologies, thus increasing their value-added contributions and participation in GVCs.

“It is essential for firms to understand the upstream and downstream emissions of their GVC activities and improve their environmental efficiency through frameworks like ESG – Environment, Social, and Corporate Governance,” Shandre said.

The don also urged ASEAN members to accelerate the implementation of the ASEAN Digital Economy Framework, endorsed during Indonesia’s chairmanship in 2023.

Shandre stressed the need for a more flexible and agile skilled labour force, equipped to support the transformation of production and services in the region.

“The region must invest in upskilling and reskilling workers to create a highly mobile and productive workforce.

“Furthermore, ASEAN must protect vulnerable groups amid rising economic policy uncertainty, particularly as the Trump tariffs are likely to increase risks for workers and low-income communities,” he said.

Shandre cautioned that the US-imposed reciprocal tariffs, which average 34 per cent and vary across ASEAN countries, may lead to more bilateral negotiations and a focus on national interests over regional integration.

“This will directly challenge ASEAN centrality and the framework that underpins our regional and global integration.

“ASEAN centrality is the strength of the region, and geo-economic statecraft has long been a key feature in managing geopolitical challenges and fostering shared economic goals,” he said.

Shandre added that this principle has anchored ASEAN’s economic cooperation since its establishment in 1967, and the AEC has played a vital role in sustaining economic growth and stability across the region.

-- BERNAMA