Converging Interests of Europe and ASEAN in a (More) Multipolar Global Economy

The 47th ASEAN Summit, in Kuala Lumpur from 26 to 28 October 2025, took place amid unprecedentedly growing geoeconomic uncertainties. ASEAN underscored its resolve to maintain a fair and transparent trading system under World Trade Organisation (WTO) principles and hence chose dialogue over retaliation in response to US tariff measures with the aim of a unified ASEAN approach in safeguarding the region’s dynamic economic growth.

At the Summit, held under the theme of ‘Inclusivity and Sustainability,’ the leaders reaffirmed their commitment to narrowing gaps, promoting inclusive development, and advancing sustainable growth and digital transformation. A major milestone was reached with the formal admission of Timor-Leste as ASEAN’s 11th Member State. The European Union–represented by European Council President António Costa–was invited by the Malaysian ASEAN Chairmanship to provide remarks, also in recognition of the upcoming 50th anniversary of EU-ASEAN relations in 2027. The Summit expressly underscored the principle of ‘ASEAN Centrality’ and highlighted ASEAN’s commitment to its rules-based regional architecture as well as to multilateralism, including cooperation with organisations of the UN system.

US Bilateralism and Its Implications for ASEAN Unity  

Even as ASEAN leaders sought to project unity, US President Trump used the sidelines of the Summit–if not to say its centre stage–to advance his trademark brand of transactional diplomacy for in this case one-on-one ‘deals’ with individual ASEAN Members instead of substantive engagement with ASEAN as a regional platform. Three Memoranda of Understanding (MoU) were concluded with Cambodia, Malaysia, and Thailand, as well as a framework agreement for a future comprehensive ‘reciprocal trade’ pact with Vietnam.

The deals warrant closer examination, as the agreements differ in scope, ambition, and strategic focus:

• In the cases of Cambodia and Malaysia, the agreements are pretty similar. Deals target the removal of restrictive import licensing and other non-tariff barriers to US imports, open key sectors to US investment, and offer potential support through the US EXIM Bank and the US DFC. A tariff elimination otherwise applies only to separately notified product categories, while a 19% ‘reciprocal tariff rate’ remains in force.
• The US-Thailand MoU focuses on strengthening cooperation to develop and diversify global supply chains by promoting US investment in the exploration, processing, and recycling of critical minerals. In addition, a preliminary framework on ‘reciprocal trade’ with Thailand was reached.
• The ‘Joint Statement establishing a Framework for a Reciprocal, Fair and Balanced Trade Agreement’ between the United States and Vietnam suggests that the reciprocal tariff rate for Vietnam will remain at 20% and that the parties commit to future negotiation of a zero-tariff product list and extensive regulatory reform regarding non-tariff measures.

The ASEAN-US Leaders’ Joint Vision Statement called for cooperation and understanding to promote both a ‘Stronger, Safer and More Prosperous ASEAN and America’–an allusion to the government and aid effectiveness criteria set out in the early days of the second Trump Administration. Statements by ASEAN leaders likewise acknowledged the ‘unique role’ of the United States for peace and prosperity in the ASEAN region, as well as the ‘indispensable cooperation’ with the United States. Observers of the trade negotiations in Kuala Lumpur may likely again frame the deals as the ‘least-worst option’ at the disposal of the ASEAN countries at this stage. In this case, even the US private sector with commercial interests in Southeast Asia remained excluded from formal involvement and any in-depth consultation at this stage.

An early CSIS commentary from March 2025 suggested that the United States was potentially paving ‘a disorderly transition away from the […] rules-based economic order, that we have known for three generations’–a concern that has certainly been shared in the United States and globally. A silver lining in the concluded trade deals, however, is that they explicitly reference WTO agreements, including the WTO Agreement on Technical Barriers to Trade and the ongoing discussions on electronic transmissions, which signals–somewhat–continued ‘acknowledgement’ of multilateral trade principles despite the unilateral framing of US trade policy. In addition, the agreements include provisions on social and environmental standards and obviously on trade facilitation, which, under the pretext of implementing the trade commitments, may provide the necessary domestic reform momentum to push through desirable changes in these areas.

ASEAN’s trade profiles with the United States reveal why certain member economies have followed and have endorsed Washington’s calls for ‘reciprocal trade’. Countries such as Cambodia, Vietnam, and Thailand derive between one-fifth and one-third of their total export earnings from the US market, which leaves the countries particularly vulnerable to tariff shifts or sudden changes in US trade policy. Except for Brunei Darussalam and Myanmar, the United States ranks between first and fourth among the most important export markets for each ASEAN Member State.

The recent tariffs have affected ASEAN Member States unevenly: while Singapore, with a slight trade deficit with the United States, faces ‘only’ the 10% baseline tariff, the developing economies Myanmar and Lao PDR have been subject to prohibitive tariffs of 40%, which severely impacts the export competitiveness of the countries. The US tariffs have already triggered factory shutdowns and job losses in the two countries. In Yangon, at least six garment, bag, and shoe manufacturing facilities have closed since August 2025, with others reducing overtime or headcounts after US apparel orders dropped. In the Lao PDR, the Business & Human Rights Resource Centre expects an impact on around 20,000 garment workers and threatens the viability of around 35-40 factories tied to US buyers.

Likewise, the ASEAN Member States maintain comprehensive trade relationships with the European Union–particularly Cambodia and Myanmar–for which EU countries account for around one sixth of national export earnings.

Table 1: Export Value and Trade Balance of the ASEAN Member States with the United States and the European Union (based on Trade Reported by the ASEAN Member States)

(Source: Data retrieval and own calculations by the author based on UN Comtrade accessed via ITC TradeMap. Trade data reflect figures reported by each ASEAN member state; discrepancies may occur when compared with data reported by the United States or EU Member States)

Strengthening EU-ASEAN Economic Engagement in a Disrupted Trade Landscape

At this critical juncture, the European Union holds significant potential to strengthen its economic engagement with individual ASEAN countries–in full respect of ASEAN centrality–through mutually advantageous new developmental, business, and investment ties. The EU and its Member States should not necessarily try to fill the void left by the United States in the dynamic ASEAN region. Rather, the EU should continue to demonstrate that it remains a reliable, predictable, and fair partner, ready to offer support and engage with the region at times of economic uncertainty and disruption. Already now, ASEAN countries export 165.5 billion USD to the European Union, which amounts to 8.5% of ASEAN’s global exports in 2024 and shows the importance of the EU as a major external market for the region.

The EU-Indonesia Comprehensive Economic Partnership Agreement (CEPA), concluded in September 2025, together with earlier agreements with Singapore and Vietnam, exemplifies the European Union’s different approach to negotiating truly ‘reciprocal trade deals’ as part of its strategic and values-based trade diplomacy in Southeast Asia. The European Union has consistently demonstrated its commitment to being a predictable and principled economic partner for the ASEAN community, without ad-hoc diplomacy, aiming at shared prosperity through cooperation and efforts to build resilient value chains.

Aspects of US trade diplomacy that warrant acknowledgment are its momentum and pace. There is a sense of urgency and readiness for unconventional moves that the European Union should mirror to translate strategy into action and deliver tangible benefits to the citizens of both ASEAN and the EU, demonstrating its true level of engagement, especially if the EU and ASEAN are to upgrade their relations to a comprehensive strategic partnership by 2027.

Author: Felix Christian Haas, Progress Asia Consulting (Independent Analyst)

Photo Credits: Malaysia ASEAN Chairmanship 2025