During the panel “Free Trade Agreements: Panacea for Growth or Pandora's Box of Risk?”, discussions centred on how global trade is impacted by escalating geopolitical tensions, shifting national priorities, a heightening economic-security nexus, and digital transformation are reshaping global trade and whether free trade agreements (FTAs) could aid companies in this landscape. The panel considered whether and how ASEAN and its FTAs could be strategic instruments for resilience and growth. As with all trade-dependent economies, ASEAN faces critical challenges. At the same time, however, ASEAN attracts substantial interest as companies look to diversifying production bases and markets. ASEAN is, therefore, well-positioned to secure a meaningful position in the recalibrating global economic order – as long as policymakers and business and industry leaders formulate and implement a coherent strategy, including a more active usage of ASEAN FTAs.

As it stands and especially over the course of 2025, ASEAN leaders have emphasized a twofold strategy. First, in looking for new markets and growth, ASEAN should prioritize intraregional consumption and work through its intraregional economic agreements to (hopefully) double intra-ASEAN trade to 40 percent by 2045. There is expectation that with a combined GDP of US$3.6 trillion and a population of 672 million, ASEAN could be a significant new economic engine. Second, ASEAN-based businesses could mitigate risk and diversify trade exposure by using ASEAN’s diverse external economic agreements, including the Regional Comprehensive Economic Partnership – the world's largest free trade agreement comprising 15 economies, including China, Japan, South Korea, and ASEAN members. Such twofold action would strengthen ASEAN’s ambition of a robust Single Market and Production Base and become the world's fourth largest economy by 2045.

Yet ASEAN FTA-utilization, whether intraregional or external, is not so straightforward. Despite wide-ranging ASEAN economic agreements and a virtually tariff-free region for goods with 40% ASEAN-originating content, utilization rates of ASEAN FTAs hover around 50%, largely due to limited awareness and administrative burdens. More critically, a fundamental and longstanding challenge to businesses are the non-tariff barriers (NTBs) such as burdensome regulatory, customs, and certification requirements. Information asymmetry, fragmented standards, and complex control lists often leave smaller firms (with more limited resources to tackle regulatory hurdles) behind.

For trade to thrive amid turbulence, ASEAN governments must support environments where compliance, innovation, and partnership reinforce one another. Reforms such as the ASEAN Single Window and ASEAN Tariff Finder are positive steps toward harmonized and digitalized trade facilitation. However, dismantling NTBs, improving mutual recognition standards, and simplifying rules of origin remain priorities. Open communication and capacity-building programmes are also essential to supporting smaller companies (accounting for more than 97 percent of the ASEAN private sector) to navigate this arena. 

Businesses, in turn, must proactively build expertise in understanding tariff schedules, rules of origin, and digital provisions embedded in ASEAN FTAs to use them more frequently and effectively. Although such efforts add to existing operational pressure such as tightened cost margins and profitability, uncertain supply chains, and heightened compliance rigours, they are vital for competitiveness in the new trading environment. Developing this capability will also help overcome the uncertainty that often leads to corporate inertia (or paralysis) and unpreparedness for policy or market shocks.
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