Asean+3's role in a rapidly fragmenting world

The risks posed by the fragmentation of the multilateral trading system transcend mere inefficiencies. Without a coherent, rules-based framework, global value chains will become vulnerable, investment risks will rise, and smaller, trade-dependent economies will be left increasingly exposed to the arbitrariness of bigger nations.

- HOE EE KHOR JAE YOUNG LEE

More alarming still, fragmentation is heightening geopolitical tensions. As global trade splinters into competing blocs, escalating strategic rivalries are fueling mistrust and eroding the spirit of cooperation that underpins the multilateral order. Over time, this dynamic could drive a major economic decoupling, which would diminish economies of scale and undermine the broader welfare gains that free trade has historically delivered.

Emerging and developing economies will bear the brunt of trade fragmentation. Without robust mechanisms to ensure fairness and predictability, their ability to integrate into global markets and achieve sustainable growth will be severely constrained.

In this challenging environment, Asean+3 countries - the ten Association of Southeast Asian Nations member states, plus China, Japan, and South Korea - find themselves at a crossroads. Long reliant on open markets, integrated supply chains, and export-driven growth, the region has much to lose - but also much to gain if it successfully navigates the current challenge to the global trading system.

The Asian financial crisis of the late 1990s offers valuable insights into how to respond to the current economic environment. The crisis marked the region's first major test, revealing deep structural vulnerabilities but also catalysing bold reforms and stronger regional cooperation. What followed was a profound transformation, as sound domestic policies and deeper regional integration enabled Asean+3 economies to emerge stronger, more resilient, and more interconnected.

Now, a generation later, US President Donald Trump's tariff war is undermining the foundations of the rules-based international order that enabled the rise of Asean+3 economies. This time, member states must do more than adapt; they must help to shape a global trading system that reflects their interests.