Commit to Free Trade

According to the ASEAN+3 Macroeconomic Research Office (AMRO Asia), the existing rules-based multilateral trading system which has for a long period been the cornerstone of global economic integration and prosperity, is now being challenged by the US Trump administration's unilateral protectionist policy.

- MARIANNE GO

Rising protectionism, selective trade measures and weaponization of tariffs are eroding the foundations of what the world follows under a rules-based global trade order.

In a recent article published in Project Syndicate, AMRO Asia economists Hoe Ee Khor and Jae Young Lee warned that these developments not only jeopardize the economic gains accumulated over decades of globalization, but also threaten the stability and prosperity that open trade has long supported across regions.

The AMRO Asia economists warned that the growing uncertainty has clouded business confidence and undermined investment decisions. Firms in both advanced and emerging economies are rethinking their long-term investment strategies, delaying or canceling plans and redirecting capital in response to fears of abrupt regulatory shifts or market disruptions. Global supply chains, once optimized for cross-border efficiency, are now being reshaped around redundancy, resilience and protectionism.

Amid this flux, the need for a reliable anchor for global trade has rarely been more urgent. The risks of a fragmented global trade system go beyond inefficiencies, Khor and Lee said, adding that without a coherent, rules-based framework, global value chains become vulnerable, investment risks amplify and smaller, trade-dependent economies are left exposed.

More worrying, the two said, economic fragmentation feeds geopolitical tension. Trade blocs aligned along political lines can inflame strategic rivalries, fan mistrust and weaken the spirit of global cooperation that underpins multilateral institutions. Over time, the world could see a decoupling of major economic systems, a loss of scale efficiencies and a decline in the broader welfare gains from free trade.