In efforts to safeguard its regional trade stability amid rising global protectionism, an analyst believes that ASEAN must demand reciprocal market access from major trading partners such as the European Union (EU) and China, especially in sectors like palm oil, halal products and electric vehicle (EV) battery minerals.
According to Universiti Teknologi MARA senior fellow at the Centre for Media Information Warfare Studies, Noor Nirwandy Mat Noordin, Southeast Asian economies are subjected to non-trade barriers such as environmental standards and suffer huge trade deficits – especially palm oil exporters – as is in the case with China.
He said that the latest round of US tariffs – with Malaysia slapped with a 25% duty on selected exports starting 1 August – should serve as a wake-up call for ASEAN to act more decisively as a bloc to garner increased access to lucrative markets.
While ASEAN is often recognised as a strategic partner especially by the EU, Noor Nirwandy lamented that the region continues to face restrictive market access measures.
He then cited the EU Deforestation Regulation (EUDR) and the non-recognition of sustainability standards, such as Malaysia’s Sustainable Palm Oil (MSPO) and Indonesia’s Sustainable Palm Oil (ISPO) as stumbling clocks for Malaysian and other palm oil exporters.
“These are clear double standards, but although the EU recognises ASEAN as a strategic partner, it enforces restrictive policies on palm oil under environmental pretexts. If ASEAN wants fair treatment, it must move as a bloc and assert its own standards,” he explained.
He stressed that ASEAN should consider bringing the matter to international forums such as the World Trade Organisation (WTO) and insist on mutual recognition of regional sustainability frameworks to ensure palm oil producers are not unfairly penalized.
“Malaysia’s MPSO and Indonesia’s ISPO are already robust standards, (which is) inconsistent for the EU to disregard them while demanding deeper engagement with ASEAN,” he added.
Turning to trade with China, Noor Nirwandy said ASEAN continues to run a significant trade deficit and called on member states to demand fairer and deeper access to China’s vast domestic market, particularly for high-value exports like halal-certified goods and EV battery minerals.
“China benefits enormously from ASEAN trade. It is time ASEAN countries – especially middle powers like Malaysia – use strategic exports as leverage to negotiate better terms,” he pointed out.
He also emphasised the importance of ASEAN maintaining a neutral posture while broadening its trade diplomacy with all major powers, including the US.
“ASEAN must not tilt too far in any one direction. Neutrality is our strength, but neutrality does not mean inaction. We need assertive economic diplomacy that reflects ASEAN’s importance in global supply chains,” he said.
Additionally, the new round of US tariffs, he added, could catalyse ASEAN to accelerate the implementation of the Regional Comprehensive Economic Partnership (RCEP) and broaden participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
“These trade frameworks can help cushion the blow against tariff shocks and open up more diversified markets. ASEAN must press ahead with greater integration and stronger institutions under the ASEAN Economic Community (AEC),” he continued.
Malaysia-ASEAN Ties Could Lead to Multilateral Cooperation, Counter Trade Pressures
At the same time, Economist Nungsari Ahmad Radhi opined that Malaysia should continue to strengthen its intra-ASEAN trade relations and engage in multilateral partnerships as it could reduce dependence on any single country and benefit all parties by minimising both trade and non-trade barriers, including tariffs and the movement of goods across borders.
While Malaysia cannot control the actions of other countries that impose tariffs and duties as pressure tactics, it can choose to respond diplomatically and in ways that align with its national interest.
Nungsari advised for Malaysia to maintain its current strategy of negotiating with the US while simultaneously forming alliances and bolstering existing trade relations, especially within ASEAN.
“We leverage US companies to lobby the US government, since a significant portion of electronics and electrical (E&E) exports involve intra-firm trade by US companies across borders,” he said.
However, Nungsari emphasised that Malaysia must consistently support multilateral institutions over the long term.
“We need to do more to integrate ASEAN economies, even on a bilateral basis, if not all at once, such as Malaysia-Singapore. We should deepen cooperation between Malaysia and Thailand and definitely with Indonesia as well.
“Achieving free movement of goods between Malaysia-Singapore in the form of customs union, Malaysia and southern Thailand, Sumatra and Peninsular Malaysia as well as Sabah, Sarawak and Kalimantan, are areas that should be explored and strengthened,” he added.
Echoing this, Putra Business School Associate Professor Ahmed Razman Latiff said that as long as there is room for negotiation, Malaysia should seize the opportunity, since some countries – like the Philippines and Vietnam, among others – have successfully reduced tariffs.
“We hop that this time, the negotiations will succeed in lowering tariffs, if not eliminating them. We must continue negotiating because it is not impossible to secure exemptions or reduction,” he continued.
Ahmed Razman also pointed out that Malaysia cannot rely solely on the outcome of these negotiations.
“We must continue to seek new markets, strengthen the domestic economy and diversify our industrial products so that if tariffs are imposed on one sector, the impact will not be severe,” he explained, stressing that Malaysia should boost intra-ASEAN trade, given the vast untapped potential.
“There is still room to increase trade among ASEAN countries. Trading within ASEAN reduces supply chain disruptions and tariff impacts, while also supporting local economies and the ASEAN economy as a whole,” he explained.
He further elaborated that Malaysia’s participation in agreements like the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and BRICS would lower costs through tariff elimination among member countries, reduce import duties, and facilitate the movement of goods.
“That is where I see the potential for cooperation with countries that have signed agreements with us,” he ended.
