Geopolitical and geoeconomic shifts are driving a fundamental recalibration of global trade, even if they are not on the immediate radar. These fault lines have widened since 2016 as domestic agendas take precedence over established trade rules.

The rollback of de minimis thresholds, tightening compliance, and escalating tensions in the Southwest Asia and North Africa (SWANA) region—with spillovers into the Indo-Pacific—are reshaping cross-border flows. These are not isolated events; they intersect with climate pressures and digital disruption to create a fragmented environment. Global trade is no longer simply liberalizing; it is increasingly fragmenting. Resilience now demands more than efficiency—it requires reducing vulnerability across supply chains, energy, and data to ensure continuity amid disruption.

Why This Matters for ASEAN

For ASEAN, this shift is not abstract. It is immediate, tangible, and urgent. Over 90% of enterprises in the region are MSMEs, while intra-regional trade remains at approximately 25% of total trade—well below other regional blocs such as the European Union at approximately 60%.

Rising compliance costs, supply chain volatility, and uneven competitive conditions are becoming the new normal. At the same time, ASEAN has been laying the groundwork for greater resilience through initiatives such as Local Currency Settlement (LCS). While not pursuing a single currency, the region is gradually reducing reliance on the US dollar for intra-ASEAN trade—lowering transaction costs and managing currency risk.

However, ASEAN’s response cannot remain incremental. It must move towards deeper integration, stronger coordination, and clearer communication of how these efforts translate into outcomes for businesses and citizens.

Key Challenges: The “triple squeeze” on MSMEs

The rollback of de minimis thresholds—low-value shipment exemptions once taken for granted—is reshaping the competitive landscape. Thailand’s removal of its duty exemption, Indonesia’s reduction of its tax-free threshold to US$3, and Malaysia’s introduction of a 10% sales tax on low-value goods signal a clear shift: even the smallest shipments are now taxed.

For a region powered by MSMEs, this raises compliance costs precisely when agility is most needed.

At the same time, geopolitical tensions are disrupting energy supplies and shipping routes. The knock-on effects are clear: higher logistics costs, longer delivery times, and increased uncertainty for businesses. When combined with climate-related shocks, the risks extend beyond trade into food security. Key regional supply chains, including rice, palm oil, and fisheries, are increasingly exposed to both environmental and geopolitical pressures.

The result is a “triple squeeze”: 1. rising compliance costs, 2. supply chain volatility, and an 3. uneven playing field for smaller enterprises. ASEAN’s low-value shipment challenges cannot be addressed through national measures alone. While the upgraded ASEAN Trade in Goods Agreement (ATIGA) promotes digitalisation, paperless trade, and MSME support, it does not mandate a uniform de minimis threshold. Each ASEAN Member State retains sovereignty, making coordination not just beneficial, but necessary.

ASEAN Integration: Operationalising Unity

ASEAN has often moved at the pace of the lowest common denominator—a pragmatic approach, but one that can dilute collective ambition. The paddy stalks in the ASEAN logo symbolise unity, reflecting a region that understands its strength lies in cohesion. The question now is whether that unity can be operationalised at the speed required.

First, integration provides scale. Individually, ASEAN markets are relatively small; collectively, they represent one of the world’s largest and most dynamic economic blocs—686 million people strong. Acting as a single market enhances bargaining power, investment attractiveness, and resilience.

Second, integration strengthens resilience. As global markets become more volatile, deeper intra-regional trade can act as a buffer against external shocks. Regional value chains reduce overdependence on distant markets and enable faster adaptation to disruption.

Third, integration enhances competitiveness. Harmonised rules, streamlined procedures, and interoperable systems reduce the cost of doing business and create a more predictable investment environment.

Fourth, integration must extend to talent and skills. ASEAN policymakers are already advancing this through services facilitation, digital economy initiatives, and frameworks such as Mutual Recognition Arrangement (MRAs) and the ASEAN Qualifications Reference Framework (AQRF). As trade becomes increasingly digital and services-driven, the next step is ensuring that talent—particularly digital talent—can move across borders with the same efficiency as goods and data.

These imperatives are not new. What has changed is the cost of delay. In a fragmented global environment, the gains from collaboration now far outweigh the short-term benefits of intra-regional competition.

From Frameworks to Impact: ATIGA and DEFA

ASEAN already has the tools. The challenge lies in implementation.

• The upgraded ATIGA aims to achieve over 99% tariff elimination, simplify rules of origin, and address non-tariff barriers. Its focus on digitalisation, paperless trade, and MSME support is welcome, alongside sustainability provisions that facilitate circular economy initiatives and recycled value chains. However, frameworks only matter if they reduce real-world friction for businesses.
• The ASEAN Digital Economy Framework Agreement (DEFA), with negotiations substantially concluded in October 2025 and targeted for signature by end-2026, is equally pivotal. DEFA aims to unlock a US$2 trillion digital economy by 2030 by harmonising digital trade rules, strengthening cybersecurity, and facilitating cross-border data flows.

The real opportunity lies in the intersection of these frameworks. Together, ATIGA and DEFA can enable a “digital-green corridor”, where digital tools such as AI, blockchain, and paperless systems enhance both trade efficiency and sustainability. Digitalisation is not separate from sustainability—it is a critical enabler of traceability, compliance, and climate resilience.

Without coordination, ASEAN risks reproducing global fragmentation within its own region.

A Roadmap for the Path Ahead

ASEAN’s next phase of integration requires both institutional discipline and effective delivery. Too often, the challenge lies not in the absence of frameworks, but in gaps in implementation and translation into business outcomes.