KUALA LUMPUR — Southeast Asia is preparing to ramp up its economic resilience as the Association of Southeast Asian Nations (ASEAN) concludes talks to upgrade two key trade agreements — one strengthening internal trade within the bloc and another enhancing its partnership with China, its biggest economic ally. According to Channel News Asia, Malaysian Trade Minister Tengku Zafrul Abdul Aziz confirmed on Sunday that the refreshed versions of the ASEAN Trade in Goods Agreement (ATIGA) and the China-ASEAN Free Trade Area (CAFTA) are expected to be formally signed this October during the ASEAN Summit.
“These landmark upgrades mark a turning point for ASEAN,” Tengku Zafrul said, following a meeting of the ASEAN Economic Community Council. “They will not only boost regional integration but also make ASEAN more competitive in an increasingly unpredictable global economy.”
Trade Upgrades in an Era of Economic Tension
This push toward deeper trade cooperation comes as ASEAN nations face heightened trade tensions and fresh tariff threats from the United States. As this year’s ASEAN chair, Malaysia has urged the bloc to take proactive steps and not fall into a “business-as-usual” mindset.
“ASEAN cannot afford to remain passive,” Tengku Zafrul warned. “We must act boldly and adopt agile, forward-looking economic strategies to defend and advance the interests of our region.”
Though no retaliatory measures are planned against US tariffs, the minister emphasized that ASEAN stands firm on multilateralism and the importance of a rules-based trading system. He also encouraged individual member states to pursue their bilateral negotiations with Washington if needed but added that any action must reflect the group’s shared position.
Strengthening Ties Within and Beyond
Intra-ASEAN trade currently accounts for just 23% of the bloc’s total trade — a figure officials say can and should improve.
“There’s massive untapped potential in trading among ourselves,” Tengku Zafrul said, noting that other major trade blocs have significantly higher rates of internal trade.
The ATIGA upgrade aims to lower tariffs even further and remove non-tariff barriers between member countries. It also includes modernized, “forward-looking” provisions to improve supply chain resilience and deepen ASEAN’s economic cohesion.
On the external front, the updated CAFTA — version 3.0 — will strengthen ASEAN’s robust relationship with China. In the first quarter of 2025 alone, trade between China and ASEAN reached US$234 billion.
China’s commerce ministry hailed the deal as a win-win move that would “inject certainty” into global trade and promote deeper integration across supply chains. It comes as China is working to counter the economic fallout of US-imposed tariffs, many of which have been delayed or modified in recent months.
ASEAN’s Role in a Shifting Global Landscape
As global economic patterns continue to shift, ASEAN leaders have expressed growing concern over the lasting impact of the US-China trade war. Malaysia’s Foreign Minister Mohamad Hasan underscored this point during his remarks on Sunday.
“This is a critical moment for ASEAN,” he said. “Our economies are being hit hard by external forces, and we must tighten regional cooperation to protect ourselves from future shocks.”
Mohamad called the current global climate “the most challenging in recent memory,” stressing the need for ASEAN unity in the face of rising geopolitical tensions.
“ASEAN is at a crossroads of global interests. We must hold fast to the bonds that unite us,” he added.
Singapore’s Deputy Prime Minister Gan Kim Yong, who also serves as Trade and Industry Minister and led the upgrade negotiations, said the outcome reflects the region’s shared commitment to building a seamless, competitive and resilient economy.
“This shows ASEAN’s determination to uphold a rules-based trade system and foster an environment where businesses can thrive despite global uncertainty,” Gan said.
With both internal and external trade frameworks being modernized, ASEAN appears poised to take on a stronger leadership role in shaping regional commerce, even as the world’s largest economies continue to reshape the global trade order.
