ASEAN Signs Upgraded Free Trade Agreement with China

The Association of Southeast Asian Nations (ASEAN) has officially signed an upgraded free trade agreement with China. This event took place on Tuesday and was highlighted by Beijing as a sign of its growing influence in Southeast Asia.

Chinese Premier Li Qiang, present at the summit in Kuala Lumpur, remarked that the 11 ASEAN countries would reap benefits from what he termed “enhanced bilateral economic and trade cooperation” with China. He pointed out that many nations are grappling with high tariffs, which seems like a dig at former President Donald Trump’s trade policies.

Li further argued that interference from outside powers in the region is on the rise, and high tariffs are affecting many nations. He cautioned that political and economic bullying would only sow division instead of yielding benefits.

China’s Ministry of Commerce emphasized the importance of the protocol signed to elevate the China-ASEAN Free Trade Area to version 3.0, especially given the challenges faced by the international trading system.

The ministry anticipates that this upgrade will enhance confidence and momentum for both regional and global economic growth, while serving as a model for resisting protectionism and unilateralism in global trade.

The original ASEAN-China Free Trade Agreement (ACFTA) was first signed years ago, and since its introduction, trade between China and ASEAN has skyrocketed from $235.5 billion to over $1 trillion. This agreement has been “upgraded” three times, with version 3.0 introducing new provisions focusing on green energy. This is particularly noteworthy because of China’s large-scale production of solar panels, electric vehicles (EVs), and batteries.

One specific provision in the upgraded agreement encourages China and ASEAN nations to collaborate on developing regulatory standards for EVs, which is likely to benefit China’s EV industry.

Interestingly, former President Trump was also in Kuala Lumpur recently for an ASEAN Summit, where he signed multiple agreements and expressed optimism about potentially sealing a trade deal with China during his upcoming meeting with Xi Jinping in South Korea.

Clearly, the ACFTA 3.0 agreement appears to be part of China’s strategy to recover from Trump’s visit and re-establish its influence among ASEAN countries, which generally aim to maintain good relations with both China and the U.S.

Malaysian Prime Minister Anwar Ibrahim expressed satisfaction with the new agreement, noting the significance of engaging both the U.S. and China within a short timeframe. He stated, “This reflects the centrality of ASEAN,” after discussions with China.

However, President Ferdinand Marcos Jr. of the Philippines adopted a more cautious tone. While he acknowledged the benefits of the upgraded trade agreement, he urged China to commit to “cooperation and meaningful engagement, especially in the South China Sea.”

Marcos lamented China’s ongoing territorial claims in the South China Sea, describing recent actions as dangerous and regrettable. Just two weeks prior, tensions had escalated between the two nations after Philippine boats confronted Chinese vessels near the Spratly Islands. Marcos also criticized China for its declaration to establish a “nature reserve” in areas claimed by the Philippines, disregarding an international arbitration ruling.

He asserted that such actions masquerade as environmental protection but lack legal grounding and violate the sovereignty of the Philippines.