By Kisho Kumari Sucedaram
KUALA LUMPUR, Oct 28 (Bernama) -- The European Union (EU) is pressing ahead with bilateral free trade agreements (FTAs) with individual ASEAN countries, which could serve as a prelude to an FTA between the EU and ASEAN.
An FTA between the EU and ASEAN has always been on the horizon, which would pave the way for increased deals between them. This will happen gradually, given the diverse economies and differing levels of development.
This reflects the EU’s pragmatic approach to building a more resilient and diversified trade network, which has become all the more necessary given the economic uncertainties in the global arena.
The partnership between the EU and ASEAN is, undoubtedly, gaining fresh momentum from the spate of deals and individual FTAs.
An FTA between two of the world’s most dynamic regional blocs is potentially lucrative, as both sides recognise that cooperation will be the cornerstone of sustainable growth.
Since dialogues were initiated more than 45 years ago, the EU and ASEAN have shared common goals, including open markets, rules-based multilateral trading and balanced development.
But today, these goals have taken on a new sense of urgency after America’s shocking tariffs influenced its trading partners to diversify away from the United States and lessen their business risks from higher costs.
As major economies adopt inward-looking policies harbouring protectionism, Europe and Southeast Asia are finding strength in each other’s markets to keep trade open and inclusive.
This was evident during the ASEAN-EU Summit held in conjunction with the 47th ASEAN Summit and Related Summits, which ended today.
Meanwhile, European Council President Antonio Costa reaffirmed that the EU views its partnership with ASEAN as crucial.
He said ASEAN was a vital pillar in addressing the multifaceted global environment, extending beyond trade to include political and people-to-people cooperation.
The EU continues to explore the possibility of a region-to-region FTA with ASEAN but at the same time acknowledged the need for flexibility given the diverse economic structures within the grouping.
“If a region-to-region agreement is not immediately feasible, we will continue to negotiate bilateral trade deals, as we have already done with Vietnam, Singapore and Indonesia. Negotiations are progressing with Malaysia, Thailand and the Philippines,” he said.
As for Malaysia, FTA talks began in 2010 but stalled after seven rounds in 2012 due to Malaysia’s reservations over the EU’s palm oil procurement policies, subsidies and sustainability clauses.
However, the European bloc is eyeing finalising the FTA with Malaysia by 2027.
Costa’s remarks reflect a pragmatic strategy shaped by lessons from recent years, in which global supply chains proved vulnerable and the need for diverse partnerships became clear.
The EU’s outreach to ASEAN, he stressed, is not only about expanding trade but also about building resilience through cooperation in digitalisation, green growth and sustainable industries.
The push would serve as a milestone in strengthening collaboration between the two blocs for the 50th anniversary of EU–ASEAN relations in 2027.
Global shifts and a new balance
The EU’s pivot towards ASEAN also comes amid shifting global trade dynamics.
America’s growing protectionism and tariff tensions with trading partners have prompted regions like Europe and Southeast Asia to look inward and to each other for economic stability.
EU Ambassador to ASEAN Sujiro Seam highlighted that the current trade climate is no longer business as usual and that it is time for Europe and ASEAN to work closer than ever to maintain open, mutually beneficial trade relations.
ASEAN reported merchandise trade between ASEAN and the EU reached US$292.57 billion (US$1 = RM4.20) in 2024.
In addition, foreign direct investment (FDI) inflows from the EU to ASEAN amounted to US$20.40 billion last year, placing the EU as ASEAN’s third-largest trading partner and second-largest external source of foreign direct investment.
The EU has an extensive consumer base of 744 million people, while ASEAN’s population stands at 680 million.
Intra-EU trade accounts for 60 per cent of total trade, whereas for ASEAN it is only 22 per cent.
Supply chains and shared growth
As there is growing evidence that the EU and ASEAN are prioritising trade cooperation, an analyst opined that both blocs must focus on strengthening supply chain transparency and cooperation, which is essential for ensuring that trade benefits flow evenly across economies.
“In order for trade to be voluminous and meaningful, it is imperative to enhance the branches of the supply chain and mitigate the encumbrances of existing systems.”
“This can be achieved through in-depth networking and information sharing between member countries,” Universiti Kuala Lumpur Economist Associate Professor Major Dr Mohd Harridon Mohamed Suffian told Bernama.
Harridon added that while FTAs offer opportunities, governments must design them with fairness in mind, including safeguards that allow local industries to adapt and compete effectively with global players.
-- BERNAMA
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