Restoring Multilateralism: Can Regional Cooperation Arrangements Fill the Void?

The last week of October and the start of November 2025 will see leaders from around the region and beyond gather for summits associated with ASEAN, the Regional Comprehensive Economic Partnership (RCEP) and the Asia-Pacific Economic Cooperation (APEC). There is still a lot of work to be done, but as the EU sews up free trade deals with members from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), this could form the foundation for a mega bloc covering two-thirds of global GDP.

The key issue at all three meetings concerns rising protectionism and the undermining of a rules-based multilateral trading system. Dealing with climate, demographic, and technological change, especially artificial intelligence, will also be discussed.

But these challenges also present opportunities for these groupings. In its original conception, APEC had advocated non-discrimination and was the model for “open regionalism”. APEC is not based on a free trade agreement (FTA), but it has been promoting the holy grail: the Free Trade Area of the Asia-Pacific. If APEC moves forward on this, it would have to exclude the US. ASEAN, RCEP and the CPTPP have an FTA at their core.

Some see FTAs as a panacea. Others see them as part of the problem, especially following their proliferation, which led to the spaghetti bowl problem (due to overlapping and complicated rules of origin). Both may be wrong. A lot depends on how the FTA is implemented. If used as a building rather than a stumbling block towards free and open trade, regionalism can promote multilateralism. While it cannot replace the WTO, it can produce similar outcomes for its members.

It could be argued that institutions like ASEAN, CPTPP, RCEP and APEC have an even more important role to play now, in filling the void created by the erosion of the multilateral trading system.

This is what the original ASEAN members have been doing by voluntarily multilateralising their preferential tariffs by offering them to non-members on a Most Favoured Nation (MFN) basis. It could be argued that institutions like ASEAN, CPTPP, RCEP and APEC have an even more important role to play now, in filling the void created by the erosion of the multilateral trading system. These institutions can help lock in the gains that have been made in liberalising trade by preventing backtracking.

But to make a real difference, these groupings must expand their membership or ‘merge’, either together or with other groupings. The CPTPP and RCEP are open to new members. The CPTPP has 7 members from RCEP, while China and Indonesia are two RCEP members which have applied formally to join CPTPP (apart from five other economies).

Mega Bloc?

The CPTPP is considered the ‘gold standard’ as far as the depth and quality of FTAs are concerned, often exceeding WTO requirements. This may limit cooperation with RCEP, but this could change. As CPTPP widens, it will lose depth. The RCEP is trying to increase its depth, implying convergence between the two. If CPTPP links up with the European Union (EU), it would cover about a third of global GDP. The EU already has bilateral FTAs with nine out of the 12 CPTPP members, which could form the basis for further integration. A lot of work would still be required, but the current climate could help overcome previously insurmountable barriers, as witnessed recently with the finalisation of the EU-Indonesia deal. If the EU could conclude FTAs with the three remaining CPTPP members, namely Australia, Malaysia and Brunei, this could also advance an EU-ASEAN Minus X or EU-RCEP deal. Suddenly, an EU-CPTPP-ASEAN/ RCEP consolidated bloc, covering about two-thirds of world GDP, becomes less of a pipe dream.

In the meantime, countries need to make the most of a difficult situation. The APEC Summit will provide the first opportunity for Presidents Trump and Xi to meet since Trump commenced his second term. The meeting comes at an opportune time, with negotiations between the two still ongoing, punctuated by increases in tensions that threaten to boil over. The uncertainty needs to end, and the meeting should create the right incentives for a rational deal to be struck.

The US was the main architect of the rules-based international trading system. Now, however, it is seeking to overhaul the system, overlooking the enormous benefits that it has reaped from it. The US pulled out of the TPP in 2017. The TPP subsequently morphed and survived as the CPTPP. The latter is a better and fairer agreement. The US is unlikely to join it or any regional or multilateral agreement, given its current focus on bilateral trade deals. Its tariff policies have shattered both its free trade credentials and commitment to multilateralism.

China has also been a major beneficiary of this system, but remains a strong proponent of multilateralism, as reiterated in its recent Global Governance Initiative. China’s role in the green transition globally, as an important player in the “new three” industries of electric vehicles, renewable energy, and battery technologies, is aided by preserving multilateralism, highlighting its public good characteristics.

What emerges in its place will almost certainly be second-best, but there will be winners and losers. But the winners will be few and will not include the big players, like the US or China, and the world will be worse off. To the extent that regional groupings like ASEAN, RCEP or the CPTPP can step up to fill the multilateralism void, the gap between first- and second-best outcomes will be narrowed, for their members at least. Greater integration between them or with other groupings like the EU will take time, although they can further narrow, but not eliminate, the gap. The best solution lies with a reformed WTO, even if it means reviving it without the US, a la CPTPP. 

This is already happening with plurilateral agreements replacing consensus decision-making at the WTO. When the US disabled the dispute settlement mechanism, WTO members initiated the Multi-Party Interim Appeal Arbitration Arrangement, currently with 57 members and covering almost 60 per cent of world trade. The great transition to a post-US order and a truly multipolar world is in train.

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