Ten years ago, the European Union (EU) and the Association of Southeast Asian Nations (ASEAN) started the talks for a Free Trade Agreement (FTA) between the two sides. However, two years later, the talks were discontinued as the EU instead wanted to conduct bilateral negotiations with ASEAN’s individual states. Until now, the EU was able to establish two FTAs with Singapore and Vietnam, while is still negotiating agreements with Thailand, Malaysia, Indonesia and the Philippines.
Another reason to stop the multilateral agreement were the complexities of finding common standards among the ten Southeast Asian countries, each with various political systems and huge differences in the size and power of their economies and populations. Also, human rights issues have been a problem for many ASEAN states like Malaysia, Thailand, Cambodia, Vietnam and Laos; creating an obstacle for the EU given its requirement to consider human rights in its trade policies.
Now as European countries look to tap the region’s strong growth, the two blocs want to resume their negotiations on the trade pact and counter a trend toward protectionism. Currently, the EU Trade Commissioner Cecilia Malmström and senior ASEAN officials are in the process to restart negotiations. However there is no targeted time-frame so far. “We believe it is important to connect two growing markets and to take away as many obstacles to trade,” she told reporters in Manila.
“Having a region-to-region agreement between EU and ASEAN is a long-term goal we have been discussing for many years. We are now taking steps towards this.”
On the other hand, the EU also expressed concerns about uncertainties arising from “growing protectionist and inward-looking policy stances” that often blame trade for the loss of jobs because of automation and industrialization. “We do see tendencies of protectionism and anti-globalization across the world,” Malmström told reporters after a meeting of economic ministers from both regions. “Closing borders and building walls, raising tariffs — that will not be a solution, but will rather reinforce the problems.”
ASEAN countries have combined 620+ million inhabitants and an economy of US$2.6 trillion. The region is mainly driven by consumption, exports and manufacturing, with Europe being one of the key importers of goods. An FTA would allow the EU to deeper connect with fast-growing ASEAN, the world’s seventh-largest market. Trade between the two regions stood at 208 billion euros ($220.5 billion) in 2016. The EU was the largest external source of foreign direct investment into ASEAN in 2015, at 23.3 billion euros ($24.7 billion).