ASEAN’s members negotiate with major powers individually because they maintain separate national tariff regimes. As tariffs and export controls increasingly serve as tools of economic security, The Diplomat’s Sukegawa Seiya argues that reviving a customs union could give the bloc greater collective bargaining power and help it move beyond a “collection of assembly hubs.”
The proposal would transfer some trade authority from national governments to the regional bloc. A Common External Tariff (CET) would require ASEAN members to apply a shared tariff schedule to imports from outside the region. It would move ASEAN beyond its current free trade area, where members have removed most tariffs on goods traded within the bloc but retain control over external tariffs.
The Limits of Open Regionalism
ASEAN’s economic integration rests on the ASEAN Free Trade Area (AFTA), agreed in 1992, and the Common Effective Preferential Tariff (CEPT) scheme, implemented in 1993. CEPT lowered tariffs on goods originating within the region. The arrangement kept national control over external tariffs while supporting foreign investment, imported intermediate inputs and production for global markets.
That model helped expand regional production networks. Yet many ASEAN members remain concentrated in assembly operations, the article says, depending on external suppliers for key components, advanced materials and research and development. The value added retained within ASEAN hasn’t risen in proportion to the value of its exports.
A customs union could change how goods and production move across the bloc. Under a fully functioning system, goods imported from outside ASEAN could circulate freely after the common external tariff was paid at entry. Certificates of origin and customs clearance procedures required for preferential intra-ASEAN trade would, in principle, no longer be necessary.
Removing national tariff borders and rules of origin could let companies source parts and materials across ASEAN and allocate production stages among member states. Lower border costs could encourage regional sourcing, consolidated production and investment in higher-value activities. The article links those changes to retaining more value added within the region and creating more high-quality jobs.
Shared Rules, Shared Authority
A customs union would require members to agree on customs revenue, trade-remedy measures and negotiating authority with third countries. ASEAN would also need to reconcile free trade agreements its members concluded separately. Those agreements would need to be consolidated into ASEAN-wide agreements, or preferential tariff rates and rules of origin harmonized across trading partners and product categories.
Without common external tariffs, internal checks would remain necessary. If national tariff differences persisted, customs authorities would still need to check origins and collect tariff differences at internal borders to prevent imports from being diverted through members with lower tariffs. That arrangement wouldn’t amount to a full customs union.
The ASEAN Geoeconomics Report 2025 recommended pursuing a CET alongside a compatible regional industrial policy. As the article describes it, the recommendation isn’t limited to tariff changes: policies would also connect members’ strengths and promote technology adoption, skills development, research and development, and sourcing within the region. A common tariff alone wouldn’t deliver an industrial upgrade.
A Test Before a Full Customs Union
As an initial step, the article proposes that members harmonize low tariffs on critical inputs that cannot be adequately sourced within ASEAN, including semiconductor manufacturing equipment and critical minerals. That measure wouldn’t establish a customs union, but it could test whether moving toward a CET is workable.
The article also calls for integration of customs procedures, standards and conformity assessment, investment policy, skills development and research and development support. Its stated goal is to connect components and materials to more advanced production stages across ASEAN.
The proposed arrangement isn’t meant to become a “tariff fortress” against the rest of the world. Its stated purpose is to preserve access to critical inputs, reduce fragmentation and encourage investment across ASEAN. A common external tariff and unified negotiating authority could strengthen the bloc’s collective bargaining position and help shield it against tariff coercion, while shifting trade decisions toward regional coordination.