Trade and US-China Tension Loom Over ASEAN Meet

The ASEAN summit in Malaysia is taking place amid unprecedented global uncertainty triggered by President Donald Trump’s tariff wars. His protectionist push and insistence on channelling investments back to the U.S. have unsettled export-driven ASEAN economies that serve as key production hubs for American markets. The tension between the US and China has added to ASEAN's woes. Southeast Asian countries do thriving business with both  China and the US, and fears of a breakdown in ties between the world's two most important economies remain a looming threat to the region

Trump At The ASEAN Summit

As world leaders scramble to stay on the right side of the unpredictable U.S. president, Trump’s presence at the summit adds a layer of uncertainty. Will he focus on trade or on projecting himself as a peacemaker, spotlighting the Malaysia-brokered peace deal between Cambodia and Thailand? Trump is keen to be associated with this event to showcase himself as a man of peace and promote stability worldwide.

For Malaysian Prime Minister Anwar Ibrahim, the host of the summit, getting Donald Trump to come to Kuala Lumpur was a major diplomatic victory for his government. He announced that Trump had accepted his invitation as early as July, much before Washington mentioned the trip. Two days ago, Trump himself said he would be travelling to Kuala Lumpur. Ibrahin regards Trump’s decision to visit Malaysia as an indication of America’s continued engagement and attention to the region. Many feared that Trump would lose interest in Asia. East Asian governments, despite their thriving economic ties with China, are wary of  Beijing and want Barack Obama's pivot to Asia to remain in place. Four ASEAN member states —the Philippines, Thailand, Vietnam, and Brunei — have contested China’s claims over the entire South China Sea. So has Taiwan, though it is not an ASEAN member. 

India-ASEAN

Though  Prime Minister Narendra Modi is not attending the ASEAN summit in person, he will address the gathering virtually. Foreign Minister Subramanyam Jaishankar will be representing India in Kuala Lumpur. ASEAN is an important partner of India in the region, and India-ASEAN relations have been steadily growing since India opened up its economy in 1991. New Delhi was keen to have economic and political relations with the thriving Southeast Asian countries. It became a sectoral dialogue partner in 1992 and a full dialogue partner in 1996. China, the US, Russia, the EU, Japan, Australia, the UK, and New Zealand are also ASEAN dialogue partners. 

Since becoming a dialogue partner, trade and political ties have steadily increased, culminating in the relationship being elevated to a strategic partnership in 2012. Late Prime Minister Narasimha Rao initiated the strengthening of ties with his “Look East” policy, and Prime Minister Modi continued it, rebranding it as India’s “Act East” policy. Today, New Delhi’s engagement with its Southeast Asian countries is vigorous.  Two-way trade with ASEAN in 2024 totalled $120.9 billion, a slight decrease from the 2023 peak of $131.6 billion. India had a trade deficit of $44 billion with ASEAN in 2023, according to available government  figures.

India and ASEAN already have a Free Trade Agreement in place, but it is in the process of being reviewed and updated. With Trump’s tariff wars affecting the global trade winds, all trade blocs as well as individual  countries are looking for fresh markets and hoping to improve trade agreements.  

“In an increasingly bipolar world, India seeks multipolarity. In this multi-polar concept , ASEAN is an important partner and therefore  the ASEAN-India summit and associated East Asia summit are extremely important not only for India but all the countries in the region,’’ says Ambassador Gurjit Singh, who follows ASEAN closely. “Besides, the India-ASEAN  FTA is under review and should be completed later this year. A new ASEAN-India action plan has just started and requires determined focus. On all matters, ASEAN has become an important area for India’s regional partnerships, Ambassador Singh adds. “Asean is one among 5 entities with whom India has a $100 billion trading relationship and a $ 100 billion plus FDI channel,’’ the ambassador points out. 

In Malaysia, Jaishankar  will look to further strengthen both political and economic ties with the ASEAN bloc. 

ASEAN member states are  Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. With Timor-Leste, the latest country to be admitted, it has now become an 11-member group.  Though ASEAN has done well economically, it is  often criticised for not being able to tackle regional conflicts. 

A prime example is the civil war in Myanmar. Despite being a member state, the world has left it to ASEAN to tackle Myanmar, and it has singularly failed to make a difference. Its decision-making by consensus is slow, and its principles of non-confrontation, non-intervention and consensus hamper ASEAN's ability to act swiftly in a crisis. ASEAN member states are aware of this structural weakness.  It is time for ASEAN to move beyond consensus and dialogue and rise up to the challenges of a world in flux.