ASEAN Beat | Economy | Southeast Asia

ASEAN Looks Toward a Post-WTO Era

Can the bloc maintain centrality amid managed trade?

U.S. Trade Representative Jamieson Greer spoke with former U.S. Trade Representative Michael Froman at the Council on Foreign Relations (CFR) on May 26. Much attention fell on the U.S.-China summit results, but the more revealing aspect was the candor with which Greer discussed the direction of the trade order the Trump administration is pursuing.

Greer argued that the Chinese state-run economy is not merely an economic system but part of China’s political system itself, and that expecting Beijing to reform state-owned enterprises, reduce subsidies, or shift to a domestic-demand-led economy is unrealistic. He suggested that the United States had largely abandoned expectations that China would fundamentally reform its state-led economic model.

This does not mean Washington is relaxing its opposition to China. Rather, the U.S. is seeking to manage the effects of that competition. The aim is to control economic relations through tariffs, export controls, investment regulations, and rules of origin – ensuring competition while maintaining stability.

Greer also indicated that MFN (most-favored-nation) treatment, the cornerstone of WTO rules, would not sit at the center of the future trade order. MFN tariffs will remain a minimum floor, but actual market access and tariff conditions will be set through bilateral negotiations.

This is a major departure from the non-discrimination principle that has underpinned the postwar GATT and WTO systems. Washington intends to shift the core of the trade order from multilateral rules to managed trade conducted through bilateral negotiations.

Repercussions for ASEAN

Against this backdrop, ASEAN is increasingly viewed as a potential circumvention export hub for China. Greer repeatedly cited his concern about Mexico, which signed the USMCA (United States-Mexico-Canada Agreement), Malaysia, which concluded a reciprocal trade agreement with the Trump administration, and other Asian non-FTA countries becoming circumvention export hubs. While Greer did not mention China by name, the implication was clear.

Washington is concerned that Chinese companies will shift production to ASEAN countries and route goods through them to the U.S. In a managed trade environment, these production networks will face close scrutiny – extending beyond the country of final production to questions of Chinese capital involvement, the share of Chinese components, and compliance with rules of origin.

The U.S. is currently conducting Section 301 investigations into........

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