Amid rising global protectionism, exemplified by US President Donald Trump’s tariff policies, the Association of Southeast Asian Nations (ASEAN) stands at a critical juncture. As the world’s fourth-largest economy with a combined GDP of US$4.13 trillion in 2024, ASEAN has the potential to counter external economic pressures by accelerating its long-pursued goal of regional economic integration. Such a move could bolster intra-regional trade, attract investments, and position the bloc as a formidable global production base.
ASEAN, a diverse grouping of ten nations, represents 8 percent of global trade and 5 percent of manufacturing value-added. In 2023, it attracted 17 percent of global foreign direct investment, according to data from the Economic Research Institute for ASEAN and East Asia. Yet, despite its economic clout and strategic partnerships with major powers like China, Japan, the European Union, South Korea, and the United States, intra-regional trade remains stagnant at around 22 percent of the bloc’s total—a stark contrast to the European Union’s 62 percent or the 40 percent among members of the United States-Mexico-Canada Agreement (USMCA).
Closing Ranks Against External Threats
The urgency for ASEAN to deepen economic ties has never been greater, as external pressures like US tariffs threaten to disrupt trade flows and economic growth. By fostering a more homogenized market, ASEAN could mitigate medium-term losses in trade and investment potential while creating new job opportunities across the region. This vision of integration involves enhancing the flow of goods, services, and investments within the bloc, ultimately strengthening its resilience against global economic headwinds. 
Kok Ping Soon, chief executive of the Singapore Business Federation (SBF), which represents over 32,000 companies, emphasized the need for collective action in a recent interview with a Singapore-based publication. He argued that the current global climate provides a stronger impetus than ever for ASEAN to prioritize regional economic integration. “If not now, then when?” he questioned, highlighting the opportunity to turn adversity into a catalyst for progress.
One of the primary strategies to achieve this integration is the removal of non-tariff barriers (NTBs) that continue to hinder intra-regional trade. While ASEAN has successfully eliminated most border levies over the years, NTBs such as licensing bottlenecks, inconsistent standards, and cumbersome customs procedures requiring excessive documentation persist. A 2019 estimate by the European Union-ASEAN Business Council identified approximately 6,000 non-tariff measures across the region, many of which act as barriers to trade. More recent data from the Hinrich Foundation, a Singapore-based think tank, indicates that between 2015 and 2025, ASEAN economies have implemented 9,873 such measures, undermining regional value chains and obstructing trade in various products.
Digital and Green Economies as Growth Engines
Beyond addressing NTBs, ASEAN’s path to integration lies in capitalizing on emerging sectors like the digital and green economies. The bloc has already emerged as the world’s third-largest exporter of digital services, trailing only the United States and the United Kingdom. The World Economic Forum projects that ASEAN’s digital economy could reach a gross merchandise value of US$600 billion by 2030. However, unlocking this potential requires frameworks that facilitate the free flow of data, digital payments, and interoperable digital identities.
The ASEAN Digital Economy Framework Agreement (DEFA) is seen as a pivotal tool in this regard. By harmonizing regulations and reducing fragmentation, DEFA could enable ASEAN economies to claim a larger share of global digital services exports while invigorating the region’s vibrant start-up ecosystem. The bloc is already home to some of the world’s fastest-growing unicorns—privately held start-ups valued at over US$1 billion—including Singapore’s Grab, Sea Group, and Lazada; Indonesia’s GoTo, Bukalapak, and Traveloka; Thailand’s Ascend Money; Vietnam’s VNG Corp with its messaging app Zalo; and Malaysia’s car marketplace Carsome. Consistent standards for cross-border data flows and digital payments are critical to maintaining the competitive edge of these companies and fostering the next wave of innovation.
However, challenges loom on the horizon. A World Trade Organization moratorium on customs duties for e-commerce transactions, in place since 1998, is set to expire in 2026. Trade experts warn that its expiration could trigger a wave of protectionist measures globally, increasing the cost of doing business and threatening ASEAN’s digital value chains. A swift conclusion and ratification of DEFA by member states are therefore imperative to safeguard the region’s digital economy ambitions.
Parallel to digitalization, the transition to a green economy offers another avenue for integration. Initiatives such as carbon trading and the development of an ASEAN power grid for renewable energy transmission could position the bloc as a leader in sustainable economic practices. With global economies fragmenting due to geopolitical tensions and trade conflicts, the opportunity for ASEAN to act collectively on these fronts has never been more pronounced—or more urgent.
Navigating Diversity and Disparity
ASEAN’s diversity, while a strength in attracting varied investments across different stages of the value chain, also poses challenges to integration. The bloc encompasses economies highly exposed to global trade, such as Singapore, alongside others reliant on natural resources and labor-intensive industries, like Laos or Cambodia. This disparity often translates into inertia when it comes to intra-regional trade and harmonized policies.
Agreements like the ASEAN Trade in Goods Agreement, part of the ASEAN Economic Community Blueprint 2025, aim to address these issues by promoting fair trade practices and reducing barriers. However, their effectiveness hinges on ratification and implementation by member states. Without concerted efforts to align standards and streamline processes, the benefits of such pacts remain theoretical.
A Call for Collective Action
The road to economic integration is fraught with obstacles, from regulatory fragmentation to entrenched non-tariff barriers. Yet, the potential rewards—greater economic resilience, enhanced global competitiveness, and sustainable growth—make the pursuit worthwhile. ASEAN’s ability to transform its diversity into a unified economic force could serve as a model for other regional blocs grappling with similar challenges in an era of rising protectionism.
For businesses across the region, the stakes are high. Companies are looking to policymakers to deliver on promises of integration, whether through removing trade barriers, establishing digital frameworks, or advancing green initiatives. The Singapore Business Federation’s call for action underscores a broader sentiment: ASEAN must seize the moment to fortify its economic foundations.
As geopolitical tensions and trade uncertainties continue to reshape the global landscape, ASEAN’s response will be a litmus test of its unity and adaptability. Can the bloc rise to the challenge and turn external pressures into an opportunity for deeper integration? The answer, for now, remains a work in progress, but the direction is clear—closer collaboration is not just an option, but a necessity for survival and growth in an increasingly fragmented world.
