In the face of impending tariffs from the US, the EU would be wise to look at how it can expeditiously conclude ongoing FTA talks with its other partners, to help its exporters find new markets to divert away from the US, and to offset increases in prices in the event of a potential retaliation.
With growing concerns over protectionist policies under a potential new US administration under President Trump, the EU has already taken steps to intensify its efforts to secure strategic trade partnerships to diversify market access and ensure economic resilience. One key example is the recent successful conclusion of negotiations with Mercosur and Mexico, which could provide the momentum needed to further other trade deals, particularly with ASEAN member states.
After more than two decades of negotiations, the EU and Mercosur—a bloc comprising Brazil, Argentina, Paraguay, and Uruguay—reached a political agreement for conclusion in December 2024. The deal, which still requires ratification, aims to eliminate tariffs on 90% of traded goods and includes sustainability commitments, particularly on deforestation. Similarly, the modernization of the EU-Mexico Global Agreement was finalised in January 2025, which updates trade rules to include digital trade provisions and stronger labor and environmental protections. Whether serendipitous in its timing or not, these agreements demonstrate the EU’s ability to move quickly under pressure, to securing diversified trade partnerships in response to rising geopolitical and economic uncertainties.
Given these recent successes in Latin America, EU trade officials would now logically turn their attention and efforts to Southeast Asia, where negotiations with Indonesia, Thailand, the Philippines, and now Malaysia have been ongoing for several years now. Indonesia, in particular, are in very advance discussions with the EU on their Comprehensive Economic Partnership Agreement. As the largest economy in the region, concluding the CEPA is no mean feat, and both sides have engaged in 19 rounds with the EU, but remain stuck on disagreements over palm oil sustainability, government procurement and market access.
Thailand and the EU restarted FTA talks in 2023 after a nearly decade-long hiatus, with both sides aiming to deepen economic ties. Thailand’s strategic position as a manufacturing hub and a key player in regional supply chains makes it an attractive partner for the EU.
Similarly, negotiations with the Philippines have not been of key interest in the past due to the latter’s Everything But Arms status, but recent high-level engagements in 2024 led to a renewed commitment to concluding an agreement that enhances trade and investment opportunities.
Malaysia, another major Southeast Asian economy, and current chair of ASEAN, had until recently held off any resumption of trade talks with the EU over differences on palm oil trade regulations and environmental standards. However, with the EU’s growing emphasis on diversifying supply chains away from dependency on China and mitigating the potential economic impact of US tariffs, coupled with Malaysia’s change of leadership in 2024, a renewed political will has revived the Malaysia-EU FTA talks.
Southeast Asia’s fast-growing economies present significant opportunities for European businesses. With a combined population of over 600 million people and increasing consumer demand, securing preferential trade agreements with the region is a strategic necessity. By finalising these agreements, the EU would not only gain greater access to these emerging markets but also reinforce its geopolitical influence in the Indo-Pacific. These four agreement,s coupled with two already in force with Singapore and Vietnam, set the bedrock for reviving the ASEAN-EU FTA, which has been fallen on the wayside for more than 15 years already.
The urgency to conclude these FTAs is further exacerbated by the unpredictability of US trade policy. The possibility of new tariffs on European goods, particularly in key industries such as automotive, steel, and agriculture, has raised concerns within the EU about potential economic disruptions. By securing alternative markets through FTAs, the EU aims to reduce its vulnerability to external economic pressures and ensure long-term trade stability.With the success of the Mercosur and Mexico deals setting a precedent, the EU must capitalise on the momentum to bring long-standing negotiations with Indonesia, Thailand, the Philippines, and Malaysia to a successful conclusion. Failure to do so could leave the EU vulnerable to economic shocks and diminished global trade influence in an era of increasing protectionism.
