ASEAN+3 Macroeconomic Research Office

A version of this article was published in Project Syndicate on June 12, 2025.

Global trade under strain

The rules-based multilateral trading system—long the cornerstone of global economic integration and prosperity—is being challenged by the Trump Administration’s unilateral protectionist policy. Rising protectionism, selective trade measures, and weaponization of tariffs are eroding the foundations of the rules-based global trade order. 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 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 cost of fragmentation

The risks of a fragmented global trade system go beyond inefficiencies. Without a coherent, rules-based framework, global value chains become vulnerable, investment risks amplify, and smaller, trade-dependent economies are left exposed.

More worrying, 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.

In such a world, emerging and developing economies would bear the brunt. Without strong mechanisms to ensure fairness and predictability, their ability to integrate into global markets, climb the development ladder, and achieve sustainable growth would be sharply curtailed.

ASEAN+3 at a new crossroads

In this challenging context, ASEAN+3—the ten ASEAN members plus China, Japan, and Korea—once again finds itself at a pivotal juncture. As a region long anchored in open markets, integrated supply chains, and export-led growth, it has much at stake—but also much to offer.

This is not unfamiliar ground. The Asian Financial Crisis of the late 1990s marked the region’s first major test, exposing structural vulnerabilities but also spurring bold reforms and deeper regional cooperation. What followed was a transformation: sound domestic policies paired with regional integration enabled the region to emerge stronger, increasingly resilient, and more connected.

Now, a generation later, ASEAN+3 faces another historic inflection point. Protectionism, geopolitical tensions, and technological disruptions are rewriting the rules of global trade. The foundations of the rules-based order that supported ASEAN+3’s ascent are subject to an unprecedented protectionist tariff shock. This time, the region must respond not as a passive player, but as a confident, mature actor capable of shaping the new order.

The stakes are high. ASEAN+3 is a key engine of global trade and growth, accounting for roughly 30 percent of world GDP, 28 percent of global trade, and nearly 20 percent of inward FDI. Its interconnected supply chains—from electronics to autos—have enhanced resilience and forged a sense of shared purpose.

These foundations give ASEAN+3 both the platform and the responsibility to help protect and sustain the rules-based multilateral trading system.

A platform for leadership and reform

The region’s strengths go beyond trade volume. ASEAN+3 boasts a vast and expanding consumer market, strong macroeconomic fundamentals, and deep integration into global value chains. These strengths—combined with the region’s technological progress—position it to lead in innovation-driven and digital trade, including renewable energy and e-commerce to enhance resilience and extend the benefits of integration. A skilled workforce, vibrant tech sectors, and a sophisticated manufacturing ecosystem further underpin high-value growth. The region’s institutional architecture—from trade agreements to financial safety nets—offers a solid platform for coordinated action.

Through these assets, ASEAN+3 is well-positioned to help reshape globalization for the 21^st century, making it more inclusive, resilient, and better suited to a fragmented world.

To lead effectively as a stabilizing force in the evolving global trade landscape requires strategic vision. ASEAN+3 must act on several fronts:

1. Deepen regional integration

Agreements like the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) provide pathways for promoting open, inclusive, and modern trade rules. Their effective implementation and expansion can build critical momentum for free and fair trade in the region.

2. Revitalize the WTO

ASEAN+3 should actively support reforms to restore the World Trade Organization’s (WTO) relevance and ensure the multilateral system remains responsive to the needs of both developing and developed economies. Priorities include pushing for more effective dispute resolution mechanisms and updating trade rules to reflect new realities such as digital trade and climate change.

3. Lead in emerging areas

ASEAN+3 should lead cooperation in emerging areas that are increasingly critical to future competitiveness and sustainability. Green technology, digital trade, resilient supply chains, and inclusive innovation represent the next frontier of global economic leadership. By coordinating policies, sharing best practices, and investing in regional public goods, ASEAN+3 can help set global standards while ensuring that the benefits of technological change are widely shared.

4.Strengthening macroeconomic cooperation

Lastly, deepening regional policy dialogue and macroeconomic coordination remains a central pillar of the ASEAN+3 agenda. In today’s increasingly volatile global environment, closer cooperation on macro-financial stability—and stronger mechanisms for crisis prevention and resolution—are not just desirable, but essential. The Chiang Mai Initiative Multilateralisation (CMIM) serves as a crucial regional financing safety net, while the ASEAN+3 Macroeconomic Research Office (AMRO) plays a key role in reinforcing this framework through timely surveillance, early warning, and policy advice. Together, they embody the region’s collective commitment to macro-financial resilience and stability and highlight the enduring value of proactive policy engagement among member economies.

A responsible path toward renewed globalization

In a time of profound global uncertainty, ASEAN+3 economies once again face the challenge of navigating a major external shock—just as they did during the Asian Financial Crisis three decades ago. Member economies must remain vigilant and refrain from protectionist measures that undermine their commitments to the regional free trade agreements, even as individual economies engage in bilateral negotiations with the US. Instead, they should focus on supporting their economies, restructuring their industries, and diversifying trade relationships to reduce overdependence on any single market.

By taking these steps, the region can play a pivotal role in shaping a global trading system that is more sustainable, equitable, and dynamic. Achieving this vision will require more than internal coordination; it demands proactive engagement with like-minded partners and international institutions. Organizations such as the AMRO can play a vital role in fostering policy dialogue, delivering timely analysis, and promoting evidence-based policymaking to guide this effort.

Ultimately, the continued success of ASEAN+3 will depend on its ability to uphold the core principles that have driven its own economic transformation: openness, cooperation, and a steadfast commitment to rules-based governance. By staying true to these values, the region can serve as a powerful example to the world, demonstrating that the next chapter of globalization can be shaped not by fragmentation and decline, but by renewed partnership and shared prosperity.