The global trading system is "ruptured", as stated by Canadian Prime Minister Mark Carney in his speech in Davos recently. Over the past decade, the world has seen several unilateral measures in the name of security that violated multilateral rules and norms of international trade.

Global uncertainties have ratcheted up in the past few months.

There was a notable departure from international rules in Venezuela and Greenland. The conflict in Iran and its spillover in the Middle East have once again raised the issue of energy security. After the United States Supreme Court struck down the unilateral imposition of reciprocal tariffs, the US administration decided to use other trade tools to impose tariffs on its trading partners.

How should Asian countries respond to the ruptured global trading system and the continuing uncertainty? Past experience shows that raising trade barriers doesn't help. The last time the US imposed tariffs under the Smoot-Hawley Act in the 1930s, there was a global recession. Various simulations also show that if all countries respond by increasing protection against each other, it would worsen the impact of the US tariffs and negatively affect income, investments, trade and jobs. Except for China, no other country has retaliated against the US tariffs so far.

They have also not raised trade barriers. As a result, trade continues to grow, including with the US. The WTO notes that around 70 percent of world trade is still being conducted under multilateral rules. But the uncertainty remains, and Asian countries must urgently formulate the right response while navigating geopolitics and balancing security concerns.

ASEAN's response, which includes bringing along East Asia, is on the right track. It begins with a clear recognition of the nexus between economics and security. After reciprocal tariffs were imposed on April 2 last year, ASEAN created the ASEAN Geoeconomics Taskforce to analyze the impacts and recommend responses, including necessary changes to regional institutions and processes.

ASEAN is developing an ASEAN Framework for Economic Security to develop secure and resilient supply chains in critical sectors, including energy, food, semiconductors and electronics, and critical minerals.

This requires closer coordination between economic and foreign ministers of member states. The initiative also aims to bring along dialogue partners such as China, Japan and the Republic of Korea and others such as Australia, New Zealand and Canada.

The energy crisis today is a test for regional cooperation. ASEAN should diversify energy sources and consider establishing shared energy reserves, similar to the ASEAN Plus Three rice reserves set up after the 2008 food crisis. In the short and medium term, it is crucial to accelerate the ASEAN energy grid and remove barriers to the export and import of energy, energy-related inputs and technology, especially in renewable energy.

ASEAN leaders agreed to a three-pronged strategy last year. Recognizing the importance of the US market, they agreed not to retaliate but to negotiate bilaterally, adhering to the principles of doing no harm to each other or trading partners, taking common positions whenever possible, and maintaining multilateral disciplines. This was achieved, by and large, and ASEAN must maintain this position to avoid agreeing to harmful provisions that would disrupt its value chains.

The second prong of the strategy involved reform and deregulation to attract investment and enhance competitiveness to build domestic resilience, as well as regional efforts to expand trade and investment through existing agreements such as the Regional Comprehensive Economic Partnership. The private sector has emphasized the need for effective implementation and monitoring of existing commitments, focusing on rules of origin, seamless flow of goods and services, and movement of talent.

For ASEAN this is less about tariffs and more about non-tariff barriers arising from standards, complex administrative requirements, lack of digitally-based efficient customs and port clearance procedures. It is also about the simplification of investment requirements and the movement of talent within the region.

The third prong is commitment to multilateralism and openness. During the ASEAN leader's meeting, leaders reaffirmed their commitment to multilateral rules and openness and called for the "full and effective implementation of the RCEP Agreement".

It is crucial to translate this commitment into action to achieve the original RCEP objective of promoting the growth of the region. The focus should be on removing tariff differentials, adopting cumulative rules of origin and ensuring the seamless flow of goods, services and people. In the longer term, issues around accession, upgrading investment, services, digital trade and e-commerce should be addressed.

Asia faces many challenges, but it also has the opportunity to benefit from the reconfiguration of value chains. By fostering win-win cooperation, strengthening regional agreements for effective implementation, and playing an agency role as middle powers, Asia can lead the way in shaping a resilient and open global trading system. The time to act is now. The political will and urgency are there, and it is crucial for ASEAN and RCEP processes to deliver on effective implementation and address emerging issues.

The author is the presidential special envoy for International Trade and Multilateral Cooperation of Indonesia and co-chair of the expert group for ASEAN Geoeconomics Taskforce.

The views don't necessarily reflect those of China Daily. 

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