- 1 year ago
An exclusive interview with Marc Mealy, Executive Vice President & Chief Policy Officer of the US-ASEAN Business Council, exploring how recent U.S. tariffs are reshaping ASEAN’s export strategies, supply chain resilience, and regional economic integration amid rising geopolitical tensions.
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00:00All right, we're at a pivotal moment in global trade, where shifting U.S. tariff policies, especially those introduced since April 2025, are not only reshaping global supply chains, but also testing the resilience and adaptability of Australian economies.
00:14Countries like Vietnam, Thailand, Cambodia, and Malaysia are feeling the pressure, but they're also exploring new strategies to diversify markets, strengthen regional integration, and reduce over-dependence on any single economic partner.
00:29At the same time, ASEAN is navigating a complex geopolitical landscape, balancing its deepening ties with the U.S., while managing its economy interdependence with China.
00:39And we have our guests already on the set with us to help us understand the situation and what our future holds for us.
00:46Thank you very much for joining us, Mark Milley, the Executive Vice President and Chief Policy Officer of U.S.-ASEAN Businesses Council.
00:55So, again, I will say thank you very much. It's a pleasure to have you here. How are you?
00:59I'm well, thank you. It's great to be here in Malaysia. Malaysia is like my second home in ASEAN, so it's good to be here.
01:04You've been here for how long, already?
01:05On this visit, about a week.
01:07About a week, okay. Well, I especially welcome you a bit late.
01:11Again, we'll talk about ASEAN tarif. This is actually not a very, we can say it's a very hot topic nowadays, especially when we talk about trades and then we talk about relationships with ASEAN countries, advanced, emerging economies.
01:28Probably we can share with us, what's your perspective about the recent tarif? We can see the two brothers, big brothers, fighting from 145 to 130, just like that, a snap of their fingers.
01:42Yeah, yeah. So clearly, you know, the U.S.-China economic relationship is probably the most significant one in the global economy today.
01:49Clearly, we are in a period of an evolution of that relationship. One might call it decoupling or strategic competition, whatever term you want to use.
02:01It really reflects a desire to sort of see a change in the really strong nature of that relationship.
02:08And so the tariff question becomes one of the tools or instruments by which both governments are trying to shape how that relationship will evolve over time.
02:16All right. This is how can we understand it? They say there's a new order, a global shift in the trade world.
02:23And given the disproportionate impact of tariffs on countries like Cambodia, Vietnam and Thailand and ASEAN, we can see almost half of ASEAN were being hit with tariffs, half of it.
02:36And then we want to say how can ASEAN countries diversify the export markets and reduce heavy dependence on the U.S. markets?
02:44Not we're trying to get away from the war, but we're trying to keep our interests safe for the people.
02:51I think for countries in Southeast Asia, which obviously are major trading partners of both countries, both the U.S. and China,
02:59this is a moment where countries really now need to think through how can they really maintain their competitiveness with the entire world,
03:08even as maybe their bilateral ties with China or the U.S. may evolve over time.
03:14I think for countries in Southeast Asia, it is a bit complex because it's geopolitics.
03:20There's also other dimensions around supply chain linkages.
03:23In a sense, China is one of the factors that makes ASEAN so globally competitive.
03:28At the same time, China is a big market for both United States companies, but also ASEAN companies.
03:35So I think that makes maybe a difficult landscape that ASEAN governments have to kind of figure out ways to navigate.
03:41One of the things that we're seeing in terms of the U.S. private sector, we're very excited about this part of the world.
03:47People know this is where the growth is in the world.
03:49And so, therefore, there's a real desire to make sure that as the governments in Southeast Asia figure out how to navigate,
03:57we would hope they would continue to engage, of course, with the United States as an important market,
04:01not have to be put into a position of choosing one market or the other.
04:07And then also, are there opportunities to even strengthen domestic economies to make them even stronger and even more attractive globally?
04:15From your perspective, how effective are ASEAN government's strategies to navigate bilateral agreements, regional agreements,
04:23to, we can say, mitigate the impact of U.S. tariff?
04:27Yeah. So I think we've already seen a number of countries, as they've tried to figure out what's the best way
04:33to navigate the change in U.S. trade policy, has included, let's join other free trade agreements.
04:39So we've already seen examples of other countries in Southeast Asia saying,
04:42we're going to maybe join CPTPP as another preferential free trade agreement,
04:46which U.S. companies would find very valuable.
04:49That's one thing.
04:50Secondly, I think governments in the region are now saying,
04:53what can we do more in terms of our own regional economic integration agenda?
04:57So things like successfully concluding the Digital Economy Framework Agreement by the end of this year
05:02would be a big thing for all 10 countries in ASEAN.
05:06And there's probably other initiatives like the upgrading of the ATIGA Agreement.
05:10And last but not least, even successfully concluding the FTA with Canada, I'm sorry,
05:15that's in the process.
05:17All these kinds of things, I think, represent ways which countries can diversify their partnerships
05:21during this challenging time.
05:24Diversify is very important for us to explore new and bigger markets.
05:29I'm sorry, are you okay?
05:29Come upon me.
05:31But we want to take a look at this.
05:34But probably we caught in the fire of a war between not only the threat towards each other,
05:39but in terms of one side wants to dominate more than the other in terms of the trading world.
05:44Well, and how do you access, what are some of the challenges that you see for us to diversify
05:51portfolio, diversify our market value?
05:55It's not easy because every country, even in ASEAN, even within the internal,
05:59we have our own standard regulation and policy that we have to adhere to.
06:03What's your thought on this?
06:04Yeah, I think these are opportunities right now for, I think, for the governments in the region
06:08to say, while we're all 10 individual countries in ASEAN, the success of all of us individually
06:15is linked to how effectively we are integrated with each other.
06:19And so if there are ways to really move sort of the key components of the ASEAN economic
06:24community agenda forward, in other words, harmonizing more regulations across all 10 countries,
06:30creating more opportunities for businesses if you are approved to operate in one country,
06:36how easy then should it be to also be approved to operate in other ASEAN countries?
06:42So these are, we all know, are works in progress.
06:45They are sometimes politically challenging.
06:47But I guess we would make the argument that now more than ever,
06:51this is the kinds of efforts and the kind of directions that ASEAN countries need to really
06:56emphasize going forward.
06:57I'll give you one example.
06:59We think right now the Malaysia-Singapore joint special economic zone project is a very
07:05potentially strategic opportunity, not just to sort of create another location where companies
07:12can really come and invest, but actually maybe to devise brand new rules for how companies
07:18could operate.
07:19Maybe look at ways of promoting more renewable energy supplies for the companies that will
07:24locate in this special economic zone.
07:26We think, again, this is an opportunity to think more strategic about projects like that,
07:32that actually could have a real broader regional impact.
07:35And then we can see we can have more space and opportunity to think and disclose any strategic
07:41moving forward in mitigating this impact.
07:46Well, based on your perspective, your own percent of value, how do you access the long-term implications
07:51of U.S. tariff policy towards the ASEAN's role in the global value chain, especially in electronics,
07:58tax sale, and even agriculture?
08:00Yeah.
08:00So we've certainly seen the evolution of how the U.S.-China relationship has evolved, and more
08:07and more investors and companies sort of adopting their sort of China-plus strategies, right?
08:11But that presented big opportunities for economies in Southeast Asia.
08:16And we've seen a lot of investment move into Southeast Asia, again, to maybe get away from the U.S.-China
08:22relationship, but then also to also still be globally competitive.
08:25Now we have this new challenge, in other words, the change in U.S. trade policy.
08:29Once again, it is sort of maybe the equivalent of another sort of shock to the system.
08:34And I think countries in the region, as they're kind of assessing, how can we turn that shock
08:39into, again, mitigating the negative dimensions of it, but also where can we take advantage
08:45of opportunities?
08:46So, for example, as companies are thinking through, like, wow, we'd like to find those parts
08:52of the world where maybe there's, relatively speaking, more certainty to help us navigate
08:57right now global uncertainty.
08:59If ASEAN and individual ASEAN countries can be perceived as those places where there's
09:05greater certainty of policy, of regulations, of reforms, I guarantee you companies and investors
09:12will say, hmm, we're looking for certainty, and we're going to go to the places where there's
09:18growth, where we have relative more certainty.
09:22And if ASEAN countries can say, we are that part of the world where the growth is here, there's
09:26clarity of policies, there's improved regulations, I think that will help, again, seize the
09:31opportunities and maybe mitigate the potential challenges.
09:34And definitely it's amazing how you share, until this now discussion, it's how can ASEAN
09:40achieve success, not only individually, but together.
09:44To what extent do you see the U.S. tariffs as a geopolitical tool aim at countering China's
09:51influence on ASEAN?
09:52Yeah, I mean, I think there's, let's be honest, there's a global competition between
09:57the U.S. and China, particularly in terms of economics.
10:01We would make the argument that where that competition is really happening, it's in Southeast
10:06Asia.
10:07So this is the place where the competition is happening.
10:09So we're seizing the fact that the change in terms of the tariff policy, but also the negotiations
10:17that are going on are actually generating some new commercial opportunities.
10:20We are seeing governments in Southeast Asia maybe adjust certain policies to create more
10:25room for U.S. companies.
10:27So from a commercial point of view, that's a good thing.
10:29The flip side, of course, is that is, in some instances, we are wanting to make sure that
10:34this change in U.S. policy doesn't maybe create a sense of America is no longer the strong,
10:42trusted trade partner that it has been for many, many years.
10:46Because we know other competitors will probably try to take advantage of that and say, hey,
10:52we are now more of your trusted trade partner.
10:55And so we want to make sure that that doesn't happen.
10:57Because we think at the end of the day, countries in Southeast Asia, their interests are best
11:01served when they are able to engage both the United States as well as China, as opposed
11:06to being forced in some kind of a zero-sum scenario.
11:09This is a very important and critical situation that you have just shared with us, Mark.
11:15And also, it's very important for us to see maybe a new role of how ASEAN can play a strategic
11:22role to mitigate all of these implications, effects, and policy.
11:27Not only that ASEAN has also been hard with high tariffs by the U.S., but also we are facing
11:34the effect of dumping.
11:36For example, we know that Malaysia has now introduced around 9 empty measure dumping for the past
11:4610 years.
11:47And then we say Indonesia, they are neutral, but we can say almost 150 factories were developed
11:53in 2024 alone.
11:55And then for Vietnam also, we can see it has become a Chinese trans-treatment hub for Chinese
11:59product.
12:00And you are associating that with 46%.
12:03So, towards one goal, to mitigate all the effects of splash zone from the tariff, how
12:11is maybe checking on the progress, on ASEAN progress, towards the goal outlined in the
12:17KL declaration recently, particularly in creating a deeply integrating and resilient regional
12:23economy as we are not managing tariff rate, but we are also managing the impact from both
12:30of our big countries.
12:31Yeah, and that's, you've just described really what I think the key sort of strategic imperative
12:36is for ASEAN countries.
12:37In other words, there's no way ASEAN countries are going to sort of disengage with America
12:42or disengage with China.
12:43But as the way of sort of how to position ASEAN in terms of these pressures that may be
12:48coming from one or the other, this is where, again, we'd say now is the time to really stress,
12:53how can we be more globally competitive?
12:55So, again, countries joining more free trade agreements, deepening integration efforts in
13:00the region, I think, would be very helpful.
13:02And we're certainly, the one thing we're also seeing is that as the governments are trying
13:06to figure out their respective strategies, to understand that there can be a hybrid approach
13:11here.
13:12In other words, there can be things that can be done to really enhance economic and commercial
13:17with the United States, even in response to maybe higher tariffs.
13:21And, of course, every country in the region has to sort of do their own calculation as
13:26to how much they really can afford to navigate a different relationship with America.
13:32Like Vietnam, obviously, a larger share of their trade with the world is with America.
13:37So, therefore, their position is a little bit different than, say, Malaysia.
13:40Malaysia obviously has trade with the world, and a piece of that trade is with the United
13:45States.
13:45So, obviously, Malaysia has a sort of a different calculation to make in terms of how to figure
13:50out what's the sweet spot, what's the middle ground, so to speak.
13:53And, again, not being forced to sort of pick one or the other.
13:57Because one of the things that's very, very clear, America is the major source of foreign
14:00direct investment to ASEAN.
14:03China is the biggest market for ASEAN's products.
14:07Obviously, you don't want to have to pick one or the other, because if you make such a
14:12choice, it will have a negative economic impact on your domestic economy.
14:15So, again, I think that's what the governments in Southeast Asia really have to think through,
14:19how can we, again, find that sweet spot in between both situations?
14:24Even though we can coexist in a lot of aspects and components, even if we don't like each
14:28other, especially with our big brothers, it's very important for us to play not only the
14:33role in the global supply chains, but in neutrality.
14:35I'm saying that, okay, we're still good with you, we want to do business with you, same
14:40as, well, to China.
14:41That is something that we propose, ASEAN is proposing, that voice, that initiative, and
14:45that education.
14:47But help us understand this a bit more.
14:49What are some of the biggest challenges that ASEAN faces in narrowing the development
14:54gap and fostering inclusive growth amid external factors?
14:58That is something that is beyond our control.
14:59Yeah, yeah, which I think this is the kind of thing, as someone that's been working in
15:03Southeast Asia for many, many years, I've often said to government officials that ASEAN's
15:10long-term success will not only be driven by the countries that are the most advanced and
15:15the most developed, but also how are the less developed parts of ASEAN moving forward in
15:21terms of the economic integration agenda?
15:22I think there are efforts that need to be made to ensure that the smaller countries like
15:28Cambodia, Laos, and obviously the situation in Myanmar is very challenging, but those societies
15:35need to feel that there are more benefits for them nationally as integration in the region
15:41is deepened and mechanisms need to be put in place that allow them, for example, to participation
15:47like in the digital economic framework agreement.
15:49But maybe understand that they can't make all the reforms at the same pace as Singapore
15:55or Malaysia will make, that they need to have longer phase-in periods or longer timeframes,
16:00but they're included is the most important thing.
16:03The other bigger, I think, and this is where I know U.S. companies, I think, are real champions
16:07in, is the fact when it comes to the region and for inclusive development, human capital development
16:12is so important.
16:14And I think U.S. companies, I think, are the best in the world when it comes to training the
16:18people who they employ, because as you know, when a U.S. company sets up an investment in
16:22Malaysia or Singapore, they're not going to bring over 10,000 Americans.
16:26They're going to employ 10,000 Malaysians, 10,000 Singaporeans, 10,000 Vietnamese, and
16:31those individuals are going to benefit from the opportunities of building their own skills.
16:35I think that'll be really, really important.
16:36And last but not least, I think the questions around sustainability and energy transitions,
16:41these are, I think, complex questions that countries nationally are trying to navigate.
16:47Regionally, there's benefit from being deepened in the cooperation.
16:50As we know, we're seeing now, how can ASEAN be more effective at having renewable energy
16:55that's produced in one part of ASEAN be transmitted to where renewable energy demand is growing
17:00in another part of ASEAN?
17:02To me, those types of initiatives, as they're trying to move forward, would be very, very valuable
17:06for that more inclusive and sustainable development that I think ASEAN has the potential to really
17:12achieve.
17:13It's not an easy work, Mark.
17:15I'm very optimistic in that regard.
17:17I think, you know, this part of the world has navigated big challenges before the 1997
17:22Asian financial crisis, COVID pandemic, the 2007 financial crisis in our society.
17:28If you look at all those periods of time, ASEAN has really sort of stepped up and figured
17:34out we have agency, we're not just simply passive takers in this world, and we can do
17:40and we can figure out when does it make to be strategically neutral when it's based upon
17:46the calculation of their own interests.
17:48It's based on the situation.
17:49Exactly, exactly.
17:50So I think those are experiences that will probably be very necessary in this current period.
17:55All right, I understand.
17:56I like that very important point.
17:59We're in our last segment, last session of the time.
18:02Maybe you can share with us, probably we need to look at internal first.
18:07Internal, how can we work together from the governments to private sector until all the
18:11small stakeholders from there.
18:14And then one country, okay, we internal are already in prep, then we can work together
18:19with another country.
18:19But we can work effectively if another country, we can say all strategy is aligned.
18:26Then we can work together.
18:27So that is one of the ways.
18:29Moving forward, in what ways can the U.S. ASEAN Business Council facilitate stronger
18:34private sector engagement to address supply chain vulnerabilities and promote sustainable
18:39growth?
18:39Maybe we can say that usually private sector have their own aims, agenda.
18:44It's not that they don't want a corporation, but their objective is a bit different.
18:48But this time, we need support to a bigger narrative.
18:51We need from everyone's support.
18:52I think one of the good things, even though in this current challenging environment and
18:58with greater uncertainty, we're seeing governments in Southeast Asia actually do a lot more direct
19:05engagement with companies and really sitting down with companies to say, hey, we really
19:10want to understand what your priorities are.
19:13And generally, you know you want to expand business.
19:15So we know that's your priority.
19:16We also want to understand where you see the concerns or the challenges.
19:19I think that also creates the opportunity for governments to really reiterate, what are
19:24our priorities?
19:25What are we really looking for from the private sector?
19:29So I'm optimistic, again, that in some of these conversations, you do see more sort of
19:34win-win scenarios that emerge, so to speak, out of those kind of direct relationship building.
19:39And then last but not least, I think, you know, from the U.S. business community point
19:42of view, there's still a very, very strong commitment to those kinds of broader public
19:47policies, sustainability, for example.
19:49Even as maybe government policy value on those kind of topics change, from the U.S.
19:55private sector point of view, it is still critical.
19:59It is still an area where companies want to work together with governments and figure out
20:03pathways forward.
20:04And I've always made the argument how ASEAN countries and as individual countries and as
20:10a region figure out that delicate balance between still promoting good economic growth, but also
20:17growth that's more sustainable.
20:18It's actually probably going to create some very valuable lessons for other countries around
20:23the world.
20:24Countries are going to watch if a Vietnam, which is growing very rapidly, for example, attracting
20:30lots of investment, therefore has great demand for energy, but is also increasing the amount
20:36of energy it supplies from renewable sources, that's like threading the balance properly
20:43because you're providing the energy security, but you're also supporting the energy transition.
20:48The lessons that a Vietnam, that a Singapore, that Malaysia figure out in this journey, I
20:53think will be globally relevant and significant for other parts of the world because this is
20:58the part of the world where you think about it.
21:00When the global economy is slowing, for ASEAN, it doesn't slow as much.
21:04When the global economy is growing, for ASEAN, the growth is faster.
21:09So in a sense, this is a part of the world where the world watches to see how ASEAN figures
21:14these complex challenges out.
21:16This is a very amazing insight.
21:18Again, thank you for helping us share tariffs, tariffs administration, ASEAN role, and how
21:23does ASEAN play in a very global supply chain moving forward.
21:26Again, I would say thank you very much to Mark Milley, Executive Vice President and Chief
21:30Policy Officer, U.S. ASEAN Business Council.
21:33Well, again, thank you very much and hope to see you soon.
21:36And definitely for all of you who missed out this discussion and interview, you can watch
21:41it in astronomy.com and across all social media platforms.
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