ASEAN is attempting to preserve its collective agency in the Indo-Pacific by accelerating regional integration through the ASEAN Economic Community (AEC), RCEP, and the Digital Economy Framework Agreement (DEFA). According to analyst Denis Hew, these institutions act as a strategic buffer against intensifying US-China rivalry and economic coercion.
US-China Rivalry and the Erosion of Strategic Hedging
The Indo-Pacific is facing a narrowing window for small states and middle powers to exercise influence. Denis Hew notes that intensifying geopolitical risks—including trade protectionism and supply chain disruptions—are testing the existing regional order.
Middle powers like Japan, South Korea, and Australia possess significant diplomatic and economic weight but lack the coercive power of superpowers. Hew cites the US-Iran war as a prime example; despite the fact that most oil and gas passing through the Strait of Hormuz is destined for Asia, these middle powers had little influence over the conflict’s resolution.
Did you know? ASEAN’s combined GDP reached US$3.9 trillion in 2024, making it the third-largest economy in Asia, trailing only China and Japan.
Economic Coercion via Trade Policy
Great powers are increasingly using trade policy as a tool of statecraft. Hew points to the US’s use of Section 301 investigations under the Trade Act of 1974 to target issues like manufacturing overcapacity, intellectual property enforcement, and forced labor.
This puts ASEAN Member States (AMS) in a structural bind. Compliance with US enforcement risks damaging ties with China—the region’s largest trading partner—while resistance invites unilateral pressure from Washington. In this environment, traditional strategic neutrality may shift from an asset to a vulnerability.
ASEAN’s Role as a Neutral Convenor
ASEAN’s influence stems from its ability to build coalitions and set agendas. The Regional Comprehensive Economic Partnership (RCEP), which entered into force in 2022, serves as a primary example. It is the world’s largest free trade agreement, covering one-third of global GDP.
According to Hew, RCEP is significant because it is the first FTA where China, Japan, and South Korea participate as equal partners. This was possible because ASEAN acted as a diplomatically neutral convenor, a role that now faces strain as US support for international rules-based trade wavers.
Future Trends: Digital Integration and Resilience
To maintain relevance, ASEAN is pivoting toward high-tech and digital infrastructure. A key development is the ASEAN Digital Economy Framework Agreement (DEFA), concluded in May 2026. The agreement is expected to be signed at the 49th ASEAN Summit in Manila in November.
Hew argues that the region must move beyond incremental adaptation. Strengthening the institutional architecture of ministerial meetings and consensus-based frameworks is essential, as these are the mechanisms that great powers cannot easily ignore.
Pro Tip: When analyzing Indo-Pacific stability, watch the implementation of DEFA. It represents a shift from traditional trade in goods to a digital-first integration strategy designed to insulate the region from external shocks.
Comparison: Structural Constraints vs. Collective Agency
| Factor | Structural Constraint | ASEAN’s Collective Agency |
|---|---|---|
| Power Source | Military might & economic scale | Coalition-building & norms |
| Trade Tool | Unilateral tariffs (e.g., Section 301) | Multilateral FTAs (e.g., RCEP) |
| Strategic Goal | Global dominance/shaping outcomes | Regional resilience & buffering |
Frequently Asked Questions
What is the ASEAN Digital Economy Framework Agreement (DEFA)?
Concluded in May 2026, DEFA is an initiative to integrate the region’s digital economy, aiming to future-proof ASEAN’s relevance and strengthen its resilience against external economic shocks.
How does RCEP differ from other trade agreements?
RCEP is the world’s largest FTA and is unique for bringing China, Japan, and South Korea together as equal partners, driven by ASEAN’s role as a neutral convenor.
Why is “strategic hedging” becoming more difficult?
Intensifying competition between the US and China makes it harder for smaller states to maintain economic ties with both superpowers without facing pressure or coercion from one or the other.
Join the Conversation: Do you believe ASEAN’s consensus-based model is still effective in the face of great-power coercion? Share your thoughts in the comments below or subscribe to our newsletter for more Indo-Pacific geopolitical analysis.