Our guest today is Dr. Denis Hew, who spent over a decade as the director of the research arm of the Asia-Pacific Economic Cooperation forum (APEC) and also spent time before that in several other key economic institutions including the Asian Development Bank (ADB). We will start a conversation talking about the state of the regional economic architecture. Be sure to tune in to the full episode where we go through a range of other subjects, including Indo-Pacific geoeconomics, growth trajectories and what the regional, minilateral and multilateral landscape will look like into 2026.

To receive full ASEAN Wonk posts and support our work, consider a paid subscription for $5 a month/$50 a year through the button below. For more on pricing for institutions, groups and discounted categories, visit this page.

Note: The transcript that follows the above free clip preview has been lightly edited for clarity and organized into sections for ease of quick browsing. For all ASEAN Wonk Podcast episodes, full video and audio podcasts, along with edited and sectioned transcripts as well as block quotes, will be a premium product for our paying subscribers, but we will include a short free transcript preview and a clip for all readers to maintain accessibility. Paying subscribers can find the rest of the full transcript and the full video podcast right below the paywall. If you have not already, do consider subscribing, and, if you have already done so and like what you see and hear, do consider forwarding this to others as well who may be interested. Thank you for your support as always!

REGIONAL GEOECONOMIC ARCHITECTURE

ASEAN Wonk: So welcome to the podcast, Denis, and let's get started. I wanted to kick off with where we are in terms of the regional economic architecture. This is an architecture which, as you know having been in several of these leading institutions, went through a series of waves. In the nineties, for example, we had APEC come to the fore and there was some excitement about institutional innovation. If we skip over a few decades to the present, there's a lot more conversation about minilaterals, sectoral deals and smaller groupings. But at the same time, we still have ASEAN coming up with digital initiatives that are regionwide. That's a multilateral institution. In APEC, there are still efforts to try to revive notions like the Free Trade Agreement of the Asia-Pacific. How do you assess the role of regional economic multilateralism within this geoeconomic environment we’re in? Is there perhaps a little bit too much doom on the multilateral economic architecture than is warranted?

Dr. Denis Hew: Well, thanks for having me. I'm a pessimist at heart, but I think I can maybe share a little bit of optimism about the economic and trade architecture. As you mentioned, in the last couple of decades, in Southeast Asia and East Asia, we've seen closer economic and trade integration among these regions. And much of that has also been driven by the the establishment of global supply chains, particularly in manufacturing, electronics, semiconductors. And, of course, within ASEAN, it's been forging closer economic integration. It's got this big project, the ASEAN Economic Community (ASEAN), which was established more than twenty years ago, and they're moving forward towards their next milestone post-2025.

But we know the world's changed quite a bit, partly because of rising U.S.-China tensions, and we're beginning to see that kind of fragmentation in the global economy. There's also a lot of disappointment at the multilateral trading system at the World Trade Organization. There haven’t been many key major deliverables. The dispute settlement mechanism is still pretty stuck and not resolved. And a lot of the economic trade agreements have been protracted in trying to reach any conclusions.

“[W]e're beginning to see that kind of fragmentation in the global economy.”

So in terms of the trend as you're moving forward, you see, as you mentioned, bilaterals and economic kinds of minilaterals. A good example is DEPA, the Digital Economy Partnership Agreement (DEPA). So you've got a couple of like-minded countries which want to move forward. If they are stuck at WTO with a quest for an e-commerce agreement, and we want to move forward in terms of the digital economy, digital trade, one of the ways is to come together and try to form a partnership agreement among themselves.

The other big trend, of course, is that we're we're seeing a proliferation of free trade agreements, both bilateral as well as regional. And, of course, within this region, the big ones are RCEP, the Regional Comprehensive Economic Partnership Agreement (RCEP), which includes ASEAN and its and its five major trading partners, including China. And, of course, beyond in the Asia Pacific region, you've got the CPTPP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). I believe it was a bit of a mouthful, but it's a reincarnation of TPP as we know, and that excludes the US, but includes some of the big and middle-sized economies. I guess the biggest challenge that we're facing here in terms of the economic architecture, particularly from the ASEAN perspective, is that ASEAN has always been known as for its strategic neutrality. It doesn't want to choose a side between US and China. We know that the US has a long presence in terms of foreign investments and technology transfers in this region. But we know that if you look at the supply chains that have been established, increasingly we see that a lot of those supply chains are linked to China. So, essentially, ASEAN member countries don't want to choose a side. What they want to do is do business with both countries. And that's one of the biggest challenges that they face right now.

“NEXT-GENERATION” GEOECONOMIC ISSUES

ASEAN Wonk: I'm glad you mentioned DEPA and some of these other sectoral, minilateral agreements because it does seem like these agreements are proliferating. You're you're seeing some in the digital space; you're seeing some on the green economy, for example. So that's a very interesting trend. One of the interesting conversations we're seeing as well is how we think about updating some of these existing agreements. So within APEC for example, they've characterized this as next-generation trade and investment issues. Things like sustainability and inclusivity. They were always there, but perhaps twenty or thirty years ago, they were not as much front and center. APEC released a report in the middle of last year, and they essentially mentioned that while there are a whole host of these next-generation issues, there hasn't really been an endorsement around areas of focus. There are still differences in views in areas like state owned enterprises, for example. How do you think about the areas that may gain traction within this basket of next generation issues?

Dr. Denis Hew: Yeah. Within APEC and also ASEAN, they've been talking about a lot of these next-generation trade and investment issues. We talk about sustainability, impact of trade from climate change and also digital trade. One of the biggest problems in APEC is that decision-making is based on consensus and because of the geopolitics of tensions between the US and China, we can't get a lot of things done. Because if you put on the table a major project looking at, say, the green economy, for example, for different reasons — nothing to do with the project itself — it could just be blocked. So over the last couple of years, we're not seeing a lot of traction in terms of building capacity and working together. And that's one of the biggest challenges. Some of the big topics that they've talked a lot about in terms of next-generation is, of course, sustainability. Increasingly, also the concerns of rising income inequality. And, in the past, we had big meetings being canceled because of demonstrations because of inequality and there's been an increased focus looking at the formulation of much more inclusive policies — social inclusion, financial inclusion, economic inclusion. So a lot of these things are being discussed.

But the biggest challenge, of course, is how do you get that implemented? And within APEC, you've got twenty one members. So getting a consensus of getting things done has become a lot harder. That's one of the reasons why you're seeing the rise of many of these minilaterals and sector-specific partnership agreements. They’re taking them out because they're stuck at WTO. They could be stuck in APEC or even ASEAN. A couple of economies coming together and moving forward, whether it's in terms of trade liberalization or opening up your markets to get things moving. And I don't see that trend subsiding anytime soon, and that's one of the biggest concerns. It's a concern partly because I'm a big supporter of the multilateral trading system. So the problem with a breakdown with the WTO is that the less developed countries will be the biggest losers because it's harder for them to do a future agreement with another country. We hope that a multilateral trading system can continue to work and that we might hopefully see some deliverables at the WTO this year.

MINILATERAL-MULTILATERAL LINKAGES

ASEAN Wonk: One of the things I mentioned earlier was this notion of the Fr