In a world of shifting trade dynamics, should ASEAN countries negotiate tariffs individually or as a united bloc? Prof. Shandre Mugan Thangavelu from the Jeffrey Cheah Institute suggests there’s room for both — bilateral deals offer flexibility, while ASEAN’s multilateral approach ensures collective strength.
00:00Now we bring back our spotlight to the trade war.
00:03In a world where trade dynamics are constantly shifting, ASEAN faces a crucial question.
00:09Should member countries negotiate tariffs individually with major economies or is there greater strength in unity?
00:17Professor Chandra Mugen Tangavellu, head of the Jeffrey Chah Institute on Southeast Asia, says there is room for both.
00:23Bilateral deals provide flexibility while ASEAN's multilateral framework ensures collective strength.
00:30So bilaterally you can negotiate, but we still need the multilateral framework.
00:35So for example, under the multilateral framework, let's say we take ASEAN-Japan, ASEAN-Korea, and ASEAN-China, we have that framework, the bigger framework that unifies and creates this big trading block.
00:50But the bilaterals are important because in a big trading block, China, Japan, or Korea under ASEAN-Plus framework can need to give to all the members.
01:02But China and Japan and Korea might like to give separately to each other country.
01:07So in that case, a bilateral allow us to go deep dive into particular pillars, particular areas that they can push the frontier.
01:17And every FDA, including the ASEAN bilateral and the ASEAN-Plus framework, go for renegotiation.
01:26So now we have renegotiated China into a more deeper and more push the frontier of reform and commitment.
01:36And the bilaterals comes into that.
01:38It's called the built-in agenda.
01:40So fairly, each time, a bilateral takes place, and then the bilateral feeds back and creates a dynamism in the multilateral framework itself.
01:49So both of them feed each other.
01:51They are not isolation and they're not mutually exclusive.
01:54So when individual countries go and negotiate with Trump, who has abandoned all rule-based, there's no rule.
02:02So small countries cannot negotiate a larger country because rules protect small countries from being exploited by larger countries.
02:10So ASEAN, under its framework, allows each country to negotiate bilaterally.
02:18Because you can take Cambodia or Vietnam or Thailand, fairly their share of trade may be around 20 to 30 percent.
02:28So with higher tariffs, there is trade diversion.
02:31So they need to negotiate to make sure that trade diversion is mitigated to a large extent.
02:36For the medium and the long-term growth, it's still ASEAN, it's still the coalition.
02:42It's still 80 percent that is built on a rule base.
02:44So a corporate platform, they're replaced with countries.
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