It has taken time, but the new EU-ASEAN Strategic Partnership matters

On 1 December 2020, the EU and the ten-member Association of Southeast Asian Nations (ASEAN)[1] agreed to upgrade their ties to a strategic partnership, ending years of often difficult discussion on the tone, content and direction of their relationship. For many reasons, this decision matters.

In Brussels and other EU capitals, ASEAN’s growing economic and geopolitical clout – recently illustrated by the conclusion of the Regional Comprehensive Economic Partnership (RCEP) mega trade deal – is too often lost amid the noise and clamour of Europe’s disputes with China. In Asia, EU–ASEAN relations are an untold story, overshadowed by heightened US-China rivalry, including in the South China Sea.

Slowly, however, geopolitical tussles and ever-fiercer geo-economic competition are drawing the two regions closer. The need for quick actions to ensure a global economic recovery, prevent future pandemics and combat climate change is just some of the compelling reasons requiring a stronger EU–ASEAN strategic conversation.

Underestimated clout

As the EU has expanded its earlier trade-dominated conversation with Asia to include politics, security, connectivity and climate change, ASEAN policymakers have responded with enhanced interest in building closer ties with Brussels.

Yet ASEAN’s economic clout is often underestimated. By 2050, ASEAN will be the world’s fourth-largest economy. With a population of 650 million, a rising middle class and economies that are set to start growing again in 2021, after a pandemic-induced contraction, ASEAN represents a vital market for European exporters and investors.

The region also plays an important, albeit oft-unnoticed, role in regional and global security. Around 40% of the EU’s foreign trade passes through the South China Sea, making peace and stability in the region a European priority. The ASEAN Regional Forum’s 27 members meet annually to discuss regional and global political and security issues, with a focus on confidence-building and preventive diplomacy in the region.

Recent economic events in Asia have turned an additional spotlight on ASEAN. Perhaps unsurprisingly, the EU–ASEAN strategic deal follows close on the heels of last month’s successful conclusion of the 15-country RCEP agreement, creating the world’s largest free-trade bloc. Described as ‘China-led’ by most Western commentators, RCEP was in fact an ASEAN initiative, and the tortuous, eight-year negotiations were chaired and steered by ASEAN officials.

Will the RCEP be followed by an EU–ASEAN Free Trade Agreement?

All bets are now on how quickly the EU and ASEAN will reopen negotiations on their own bilateral free trade agreement (FTA) – even though such an attempt failed last time around, due to discord on human rights. Since then, Singapore and Vietnam have signed bilateral trade pacts with the EU and negotiations are ongoing with other ASEAN states. Such deals are often described as ‘building blocks’ for a future region-to-region FTA.

Signature of such an FTA has strong support. ASEAN and European business leaders are in favour of opening the talks. For EU business, an FTA is seen as a way of not only boosting region-to-region trade and investment flows but also prompting an acceleration of ASEAN’s economic integration and ensuring better market access.

The decision to up the EU–ASEAN game has been a long time in the making. An EU policy paper issued five years ago clearly stated that the EU had “a strategic interest” in strengthening its relationship with ASEAN. However, twists and turns in the relationship, including Malaysian and Indonesian concerns over the treatment of their palm oil exports to the EU, got in the way.

In a last-minute deal just before the recent ministerial meeting, both sides agreed that a joint working group, set up to try and resolve the palm oil issue, will broaden its mandate to include all vegetable oils and seek a solution within the context of the 2030 Agenda for Sustainable Development and “the importance of a holistic approach to the environment”. A first meeting of the group is expected in January 2021.

Perfect timing in a complex geopolitical environment

In the end, however, the timing is perfect. The EU–ASEAN decision ensures a permanent connection between the two regions just before US President-elect Joe Biden, in a bid to repair the damage caused by the erratic foreign policy approaches of his predecessor, starts the process of America’s re-engagement with both Europe and the ASEAN.

For the EU, America’s return to Southeast Asia will mean more competition for attention. When Washington was either blundering or missing in action in Southeast Asia in the past few years, it was relatively easy for Brussels and other European capitals to increase the EU’s celebrity.

ASEAN has also benefitted from the changed geopolitical landscape, including the EU’s heightened interest in crafting a ‘beyond China’ Asia policy which included forging stronger partnerships with the region, Japan and India.

In fact, as close allies of the US, Europe and the ASEAN have been similarly shaken by Donald Trump’s ‘America First’ doctrine and the increasingly fierce US-China strategic competition. There is also equal recognition in both regions that while Biden’s election may mitigate some of the tensions and see the US seek to exert its leadership in multilateral settings, there can be no simple ‘going back’. The world has changed too dramatically in the last few years.

The US is no longer the hegemon with overwhelming hard and soft power. The world has become too complex, with too many moving parts to rely on any one leader. In geopolitics, even with the return of Biden and a promise of US diplomacy and expertise in foreign policy, US leadership will continue to weaken. Strategic competition between the US and China will remain.

In geo-economics, nationalism and economic protectionism will remain a danger, with regionalisation – including efforts to establish regional rather than global supply chains – possibly supplanting globalisation as the key driving force of economic development.

These disruptions and uncertainties make it especially important that the EU and ASEAN step up to assert their relevance.

Partners in connectivity

Both ASEAN and the EU are successful regional organisations with a similar commitment to an inclusive, multilateral rules-based order. They are now also partners in connectivity. The statement issued by EU and ASEAN foreign ministers on 1 December underlines a common concern that connectivity should uphold “the spirit of peace, inclusiveness, development, cooperation, economic, fiscal, financial, social and environmental sustainability”. Connectivity projects should also be rules-based and of mutual benefit, as well as adhere to and effectively implement relevant international norms and standards.

Other examples of increased collaboration abound. EU and ASEAN officials met on 20 March 2020 via teleconferencing to share information about the COVID-19 pandemic and commit to actions and efforts on disease control and treatment. Both parties are committed to vaccine multilateralism and have said that they will work with the World Health Organization to ensure fair, equitable and affordable access to safe and effective vaccines.

An EU Indo-Pacific Strategy

So, what next? There are plans for stronger cooperation on cybersecurity, with an emphasis on promoting “an open, secure, stable, accessible and peaceful information and communication technology (ICT) environment”. An ASEAN Smart Green Cities initiative is being backed by the EU, as is an ASEAN Customs Transit System to ease cross-border traffic across the region. High-level dialogues on climate change and health will take place.

In addition to an EU–ASEAN FTA, negotiations are ongoing on a Comprehensive Air Transport Agreement (CATA), which will cover market access, safety and security issues and allow for gradual regulatory convergence.

Finally, ASEAN input will be important as the EU starts the process of defining an Indo-Pacific strategy. Having so far resisted the trend to change the ‘Asia-Pacific’ appellation it currently uses for the region, the European External Action Service is expected to follow France, Germany and the Netherlands in switching to using ‘Indo-Pacific’ terminology. Nonetheless, inspiration is anticipated to come from the ASEAN’s strategy for the Indo-Pacific, which ensures an ‘inclusive’ Indo-Pacific region, not one which acts to exclude China.

The EU is also still hoping for ASEAN’s go-ahead to a long-standing request for a seat at the table of the East Asia Summit. That nod should come sooner rather than later so that the two regions can further deepen and widen their relations on not only a bilateral level but also in important multilateral fora.

The way ahead will not be simple. Differences over democracy and human rights as well as trade frictions are to be expected. Policymakers will have to keep sidestepping areas of discord and focus on finding common ground. It will be complicated.

In a world marked by great power competition and zero-sum games, however, ASEAN and the EU have sent a strong message that countries can work together despite their different histories, geography, political and economic structures. For both Europe and the ASEAN, that is cause for celebration.

Shada Islam is a Senior Advisor to the European Policy Centre. Yeo Lay Hwee is Director of the European Union Centre, Nanyang Technological University, in Singapore.

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[1] ASEAN members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.