The Missed Pivot

Besides the India-Pakistan war, the East, Southeast Asia, and the Indo-Pacific region have seen many trade-related activities in May. On May 20, the current ASEAN (Association of the South and South East Asian Nations) Chair, Malaysia convened a Special ASEAN Economic Ministers–Ministry of Economy, Trade and Industry (AEM-METI) Consultation, where ASEAN member states and their key dialogue partners—China, Japan, Australia, and New Zealand—reaffirmed their commitment to open, rules-based trade and closer economic integration. On 26 May 2025, at the 46th ASEAN Summit, ASEAN Member States (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam) adopted the ASEAN Economic Community Strategic Plan 2026–2030, which outlines practical directions that ASEAN intends to adopt to implement the economic aspects of the ASEAN Community Vision 2045. On May 27, Malaysia organised the first trilateral summit between the ASEAN-Gulf Cooperation Council (GCC) and China. Though Both China and the GCC — comprising Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman — have established partnerships with ASEAN, but this is the first time the Southeast Asian bloc has expanded a mechanism to include both a regional organisation and dialogue partner country. On May 30, the International Organization for Mediation (IOMed) was launched in Hong Kong, the first intergovernmental entity dedicated to resolving international disputes through mediation. Wang Yi, Member of the Political Bureau of the Communist Party of China Central Committee and Minister of Foreign Affairs of the People’s Republic of China, signed the Convention on behalf of China, among the 33 countries that became founding members by signing on-site. The Signing Ceremony of the Convention on the Establishment of the IOMed drew senior representatives from over 80 countries and approximately 20 international organisations, including the United Nations, to Hong Kong. During the inauguration, Chinese Foreign Minister Wang Yi held a meeting with his Nepali counterpart, Arzu Rana Deuba, urging Kathmandu to join IOMed at the earliest opportunity.

It may be recalled that Chinese President Xi Jinping met with Myanmar junta leader Min Aung Hlaing in Moscow on May 9. This marks their first in-person meeting since the February 2021 military coup in Myanmar. Xi promised continued Chinese assistance in Myanmar’s economic and peace processes. Following their meeting, both leaders attended the military parade in Moscow commemorating the 80th anniversary of Russia’s Victory Day at the end of World War II. According to a press release from the Chinese Ministry of Commerce (MOFCOM), Chinese Commerce Minister Wang Wentao visited Sri Lanka and Bangladesh in the last week of May. During this, several cooperation documents were signed. In addition to China, Japan has re-engaged with Bangladesh during Bangladesh’s Chief Adviser Muhammad Yunus’ recent visit to Tokyo from 28-29 May. Japan agreed to provide Bangladesh with budgetary support alongside loans and grants worth $1.063 billion, while eight other memoranda of understanding were signed covering human-resource development, worker recruitment, the business environment, and factory set-ups in the Bangladesh Special Economic Zone. Both nations committed to signing an Economic Partnership Agreement (EPA) in the coming months — an indication of Tokyo’s eagerness to relocate factories to Bangladesh.

Significance of East Asian Trade Initiatives

The above initiatives are significant as the nations seek to insulate their trade-dependent economies from the effects of steep tariffs from the United States. OECD’s Economic Outlook 2025 projected that US economic growth will slow to 1.6 per cent in 2025, down from 2.8 per cent the previous year. The report highlights that Trump’s policies have raised average US tariff rates from around 2.5 per cent when he returned to the White House to 15.4 per cent, the highest since 1938.

In March, a week before President Trump’s Liberation Day Tariff (April 2) threat, top officials of China, Japan, and South Korea held their first trade talks in five years amid US President Donald Trump’s looming tariff warning. China, Japan, and South Korea have heavily depended on trade partnerships with the US, even though the relations between the three countries have remained tense. Though disagreements over territorial issues have prevented the three Asian exporting powers from making any significant progress on a trilateral free-trade deal since starting talks in 2012, the countries’ three trade ministers agreed to “closely cooperate for a comprehensive and high-level” talks on a South Korea-Japan-China free trade agreement deal to promote “regional and global trade”, according to a statement released after the meeting, reports Reuters.

During AEM-METI Consultation with ASEAN economic ministers and their counterparts from China, Japan, Australia, and New Zealand, the ministers reaffirmed their collective commitment to a rules-based multilateral trading system, anchored by the WTO, to ensure a fair, open, and sustainable trade and investment environment. The meeting underscored the importance of expanding trade through initiatives like the Regional Comprehensive Economic Partnership (RCEP).

The ASEAN Community Vision 2045, released on 26 May, aims to be the world’s fourth-largest economy by 2045. It articulates ASEAN’s bold and forward-looking ambition to create a “Resilient, Innovative, Dynamic, and People-Centred ASEAN”. Its strategic Goal 1 aims at realising “an integrated single market, whilst seizing opportunities from new sources of competitiveness”, which is to be pursued through, inter alia, Objective 1.1, which focuses on increasing intra-ASEAN trade in goods, and Objective 1.8, that focuses on advancing the harmonisation of standards, technical regulations, and conformity assessment procedures. The share of intra-ASEAN trade in 2023 accounted for approximately 22 per cent of total trade. The ASEAN Regional Payment Connectivity (RPC) initiative was launched in late 2022. This initiative tackles long-standing challenges in cross-border transactions, where payments often rely on multiple banking intermediaries and the conventional use of the US dollar. The commitment to RPC was reinforced at the 42nd ASEAN Summit in 2023. Today, eight ASEAN members are part of RPC, demonstrating the region’s strong push for cross-border payment integration using local currencies.

ASEAN–GCI–China Summit decided to foster collaboration that promotes economic prosperity, resilience and sustainable development among ASEAN, GCC, and China, based on mutual respect, mutual trust, and mutual benefit, and anchored on the principles of inclusivity and sustainability in engaging all interested partners. The Summit also committed to enhancing economic cooperation by leveraging the complementarities among ASEAN, GCC, and China. Priority will be given to, among others, on reaffirming the central and indispensable role of the World Trade Organization (WTO) at the core of the rules-based multilateral trading system.

The establishment of the International Organization for Mediation (IOMed) could be a game changer. As the Trump Administration is increasingly distancing itself from multilateral organizations like UNFCCC, WHO, and WTO, China is taking the lead in establishing a new rules-based multilateral trading system. IOMed may emerge as an alternative to the WTO. China and Japan’s re-engagement with India’s neighbours –Myanmar, Bangladesh, and Sri Lanka will deteriorate India’s strained relations with its next-door neighbours.

While East and Southeast Asia are preparing themselves to fight the USA’s unjustified trade war, India does not look concerned. India’s only objective is to prove its military dominance over Pakistan.

The writer is a professor of Business Administration who primarily writes on political economy, global trade, and sustainable development. Views expressed are personal