EXECUTIVE SUMMARY
- The European Union (EU) consistently occupies the top spot in Southeast Asia as the preferred and trusted “third party” in hedging against the uncertainties of US-China rivalry and in commitment to “doing the right thing” in the wider interests of the global community.
- The EU’s strong economic and normative presence in the region is recognised. It is ASEAN’s third largest trading partner and source of FDI. Brussels is also recognised for its strong values regarding multilateralism and its commitment to a rules-based order, forming the cornerstone of the ASEAN-EU strategic partnership.
- However, trust in the EU amongst Southeast Asians is at its lowest level since it launched its Indo-Pacific Strategy in 2021. This is due, in part, to the preoccupation of its member states with domestic and European issues such as Ukraine, as well as unresolved disputes and trade concerns with Southeast Asian countries over palm oil and the EU’s carbon policies. Concerns about human rights violations, democratic backsliding and governance deficit happening in several ASEAN countries continue to underscore the inherent tensions between the EU’s normative aspiration and its pragmatic engagements in the region.
- The EU has room for improvement if it wishes to make good on its Indo-Pacific strategy. It needs to recognise the practical limitations that Southeast Asian countries have in complying with its regulations. It can facilitate economic development across the region through capacity-building programmes aimed at harmonising regulatory standards. It should also focus on its strengths in areas of non-traditional security rather than traditional military domains. Most importantly, the EU should recalibrate its balancing of principles and pragmatism to not only advance mutual interests but also cement its relevance in Southeast Asia.
* Eugene R.L. Tan is a Research Officer with the Regional Strategic and Political Studies Programme at ISEAS – Yusof Ishak Institute; and Joanne Lin is Co-coordinator and Associate Senior Fellow at the ASEAN Studies Centre at ISEAS – Yusof Ishak Institute.
ISEAS Perspective 2024/41, 5 June 2024
INTRODUCTION
The European Union’s (EU) role in Southeast Asia continues to be acknowledged, particularly amid the escalating competition between the US and China. As a longstanding dialogue partner of ASEAN since 1977, the EU has emerged as a major development partner for ASEAN and stands as the region’s third largest trading partner and foreign direct investment (FDI) source.[1] As its relations with ASEAN have been elevated to a strategic level since 2020, the EU has extended its influence beyond economic and normative domains.
There is plenty of evidence underscoring the EU’s consistent image as a reliable and pivotal actor in Southeast Asia. In the State of Southeast Asia surveys,[2] the EU has, since 2021, occupied the top spot as the region’s preferred and trusted “third party” in hedging against the uncertainties of the US-China strategic rivalry (see Figure 1). The EU also remains a trusted global actor committed to “doing the right thing” in the wider interests of the global community, according to the same survey. Notably, in the 2024 survey,[3] the EU emerged as the fourth most strategically relevant dialogue partner, among eleven countries, positioning it closely behind China, the US, and Japan (see Table 1).
Figure 1: Annual ranking of preferred and trusted third-party for ASEAN
Source: State of Southeast Asia Surveys[4]
Table 1: Dialogue Partners ranked in order of strategic relevance in 2024
| Rank | Dialogue Partner | Mean Score |
| 1 | China | 8.98 |
| 2 | US | 8.79 |
| 3 | Japan | 7.48 |
| 4 | EU | 6.38 |
| 5 | ROK | 5.71 |
| 6 | UK | 5.52 |
| 7 | Australia | 5.51 |
| 8 | Russia | 5.08 |
| 9 | India | 5.04 |
| 10 | Canada | 3.81 |
| 11 | NZ | 3.70 |
Source: 2024 State of Southeast Asia Survey
The EU seems poised to strengthen its role as a middle power in an increasingly strategic region of geopolitical contestation. In 2021, the European Council launched its Strategy for Cooperation in the Indo-Pacific in an attempt to strengthen its access to regional markets, strengthen its supply chain and uphold the tenets of a rules-based international order as an alternative to China’s Belt and Road Initiative (BRI).[5] Despite the EU’s ambition in the Indo-Pacific, it faces certain constraints. The ongoing war on its Eastern flank and serious concern about its ability to fund its own defence amid wavering US support cast doubt on the EU’s commitment to Southeast Asia. Furthermore, echoes of disunity have been getting louder, not only from smaller member states like Hungary,[6] but also between larger member states like France and Germany; notably, the lack of a “common front” in their bilateral relationships with China[7] is indicative of wider divergences between the pair of countries leading the EU’s Indo-Pacific approach. Considering these challenges, German Chancellor Olaf Scholz characterised Europe’s trajectory in the last two years as a “Zeitenwende” (i.e. historic turning point), prompting an inward focus on addressing domestic capacity and challenges.
The perception of a disunited and conflict-ridden Europe can have ripple effects in Southeast Asia. Concurrently, persistent concerns about human rights violations, democratic backsliding and governance deficit in certain ASEAN countries continue to underscore the inherent tensions between the EU’s normative aspiration and its pragmatic engagements in the region. This article examines the EU’s role as a resilient and reliable middle power in shaping Southeast Asia’s future, while exploring avenues for the EU to play a more influential role in the region.
EU’S ECONOMIC AND NORMATIVE POWER IN SOUTHEAST ASIA
Despite the absence of a Free Trade Agreement (FTA) with ASEAN, the EU maintains a robust economic presence in the region. As ASEAN’s third largest trading partner (trailing only behind China and the US), ASEAN-EU trade reached US$ 295.2 billion in 2022, marking a significant 9.6% year-on-year growth.[8] Additionally, the EU maintains its economic foothold as the third-largest source of FDI into ASEAN, with a substantive inflow of US$24 billion in 2022.[9] According to data from ASEAN Investment Reports[10] from the same period, EU member states such as France, Germany and the Netherlands were among ASEAN’s top sources of FDI.
Moreover, EU institutions, alongside their member states were the second largest provider of official development assistance (ODA) to the region between 2015 and 2021 (see Figure 2), signifying the EU’s multifaceted economic commitment to the region. The EU has also been viewed as the fourth most influential economic power in the region in the State of Southeast Asia from 2019 – 2024, ahead of middle powers such as Australia, India, South Korea, and the United Kingdom (UK).
Figure 2: Proportion of ODA Commitments by Countries and International Organizations (2015 – 2021)
Source: Lowy Institute Southeast Asia Aid Map[11]
Beyond its economic clout, Brussels is also recognised as a strong normative actor in the region. As part of its Strategy for Cooperation in the Indo-Pacific,[12] the EU has sought to cooperate with like-minded countries to set standards and promote good regulatory practices.[13] It indicated its ambition to promote an open and rules-based regional security architecture and safeguard freedom of navigation in the region through capacity-building initiatives. As such, shared values, including multilateralism and commitment to a rules-based order, remain the cornerstone of the ASEAN-EU strategic partnership.[14] This has translated into greater confidence in Brussels’ capacity to champion global free trade and maintain a rules-based order, with the EU ranking above other middle powers in the region across both measures (see Figures 3 and 4).
Figures 3 and 4: Annual ranking of external partners based on the degree of confidence that they will champion global trade or provide leadership to maintain a rules-based order
Source: State of Southeast Asia Surveys[15]
“PROTECTIONIST” BRUSSELS AND DIVERGING VALUES
While the EU’s influence and standing appear relatively strong, its engagement with the region is not without challenges. Persistent economic issues, such as unresolved disputes over palm oil and regional anxiety regarding the EU’s carbon policies, present ongoing obstacles. Furthermore, regional, and global geopolitical challenges such as the Myanmar crisis and the Israel-Hamas war complicate the EU’s engagements with some ASEAN member states, particularly Muslim-majority countries. As such, trust levels in the EU amongst Southeast Asians are at their lowest since it launched its Indo-Pacific Strategy in 2021 (see Figure 5).
Figure 5: Confidence in the EU to “do the right thing” to contribute to global peace, security, prosperity, and governance among Southeast Asian Respondents
Source: State of Southeast Asia Surveys[16]
A growing source of distrust are the EU’s ongoing trade disputes with Indonesia and Malaysia over protectionist practices. The EU formally challenged Indonesia’s “unlawful export restrictions” on nickel and iron ores at the WTO.[17] The WTO has ruled in favour of the EU since October 2022, and the ban remains in effect while Indonesia appeals the decision.[18] Concurrently, the EU’s implementation of the Renewable Energy Directive (RED II)[19] to phase out the import of palm oil by 2030 has sparked contention. As the largest producers of palm oil globally, both Indonesia and Malaysia have lodged cases with the WTO,[20] arguing that the EU had similarly infringed on the rules of international trade. Similar concerns have been voiced by rubber producers across the region in response to the EU’s regulation on deforestation-free products, which entered into force in June 2023.[21] Producers from Indonesia,[22] Malaysia, Thailand and Cambodia have expressed concern that Brussels’ “unilateral and unrealistic”[23] action would disproportionately disadvantage smaller farmers over large corporations.
As such, the perceived disjuncture between Brussels’ opposition to Indonesian critical mineral protectionism and its own exercise of “protectionist”[24] and “discriminatory”[25] practices, such as favouring European biofuels like rapeseed oil,[26] invites accusations of hypocrisy and double standards. Moreover, the EU’s Carbon Border Adjustment Mechanism (CBAM) has been criticised as a protectionist tool benefiting EU companies at the expense of Southeast Asian competitors.[27] These measures have incurred reputational costs for the EU in the region,[28] as reflected in the decline in confidence in the EU to champion the global free trade agenda, between 2020 and 2024 among Indonesian and Malaysian respondents (see Figure 6).
Figure 6: Confidence among Malaysian and Indonesian Respondents in the EU to “do the right thing” to contribute to global peace, security, prosperity, and governance
Source: State of Southeast Asia Surveys[29]
These trade disputes with Indonesia and Malaysia have impeded progress in an already tricky free trade agreement (FTA) negotiation process for the EU. For instance, despite engaging in 16 rounds of talks since 2016, the EU and Indonesia have made little headway, with no resolution in sight.[30] Similarly, the EU and Malaysia have suspended talks on their bilateral FTA since 2012.[31] At the regional level, the EU has only managed to put into force bilateral FTAs with two ASEAN member states – Singapore and Vietnam, with two others, namely Thailand and the Philippines, remaining under negotiation (see Annex A). This limited progress has hindered efforts to establish a wider region-to-region FTA between the EU and ASEAN, dampening regional confidence in the EU’s ability to champion the global free trade agenda over time.
On another front, the EU’s emphasis on values such as “fair trade”,[32] particularly in linking trade to democracy and other non-economic outcomes, has proven to be counterproductive and fraught with sensitivities.[33] The inherent misalignment regarding democracy is a persistent point of contention due to the diverse governance system in Southeast Asia,[34] leading ASEAN countries to consistently resist European democracy and human rights policies.[35] While it should be noted that Brussels has tamped down its proselytizing on “values”, it still holds numerous criticisms and resolutions against all ASEAN countries, including Singapore (see Annex A). Cognisant of this, the EU has struggled to prevent bilateral issues from complicating inter-regional cooperation.[36]
The increasing divergence between the worldviews of ASEAN and the EU is further exemplified by their differing responses to the war in Ukraine and the Israel-Hamas conflict. On the former, the EU has taken a firm stance against Russia’s aggression while ASEAN’s reaction has been largely ambivalent, with only Singapore imposing financial sanctions on Russia in response to its invasion of Ukraine.[37] Interestingly, the State of Southeast Asia 2024 Survey[38] highlights that economic concerns, such as the increase in energy and food prices, are prioritised by the majority in the region (68.4%). This emphasis underscores the region’s focus on immediate economic challenges over broader values such as the erosion of trust in a rules-based order and the violation of national sovereignty (14.5%).
On the Israel-Hamas conflict, there is a convergence of opinion between the EU and ASEAN on humanitarian grounds, with both parties agreeing that Israel should not be allowed to cut off humanitarian aid from the Gaza strip. Beyond this singular intersection however, opinions between the two regions diverge significantly. For the EU, the predominant position is to condemn the attacks on Israeli civilians on 7 October as “unjustifiable and inexcusable”.[39] By contrast, ASEAN member states have had a plethora of different responses to the conflict,[40] which is reflected in the ASEAN Foreign Ministers Statement.[41] While the position of some ASEAN member states, like the Philippines, may align more closely with that of the EU, others such as Malaysia and Indonesia have instead shown solidarity with the Palestinians.[42]
A UNION DIVIDED AND WEAK
Apart from trade tensions and diverging values, Southeast Asian respondents have been consistently concerned regarding the EU’s potential to be distracted by internal affairs and its perceived lack of capacity or political will to engage globally. These concerns were the two most cited reasons in the State of Southeast Survey between 2020 and 2024 for respondents to distrust Brussels (see Table 2).
Table 2: Proportion of Southeast Asian responses to the question “Why do you distrust the EU?”
| Response to “Why do you distrust the EU?” (%) | 2020 | 2021 | 2022 | 2023 | 2024 |
| The EU does not have the capacity or political will for global leadership | 33.70 | 25.90 | 26.70 | 33.40 | 28.20 |
| My country’s political culture and worldview are incompatible with The EU’s | 16.60 | 9.50 | 12.40 | 9.20 | 16.50 |
| I am concerned that The EU is distracted with its internal affairs and thus cannot focus on global concerns and issues | 35.40 | 38.70 | 30.10 | 29.40 | 28.70 |
| The EU’s stance on environment, human rights, and climate change could be used to threaten my country’s interests and sovereignty | 3.50 | 15.10 | 17.70 | 14.50 | 11.10 |
| I do not consider The EU a reliable power | 10.80 | 10.80 | 13.10 | 13.50 | 15.50 |
Source: State of Southeast Asia Surveys[43]
Indeed, realistic concerns persist regarding the EU’s ability to foster solidarity amongst its member states. Contentious disagreements within the EU over funding support to Kyiv underscores this challenge[44] Furthermore, domestic issues such as mounting dissatisfaction over the rising cost of living, agricultural protests sparked by EU’s regulations,[45] the European debt crisis and bailout negotiations[46] as well as the complexities of the EU’s policy towards Israel and Palestine[47] are just some examples of internal tensions.
Externally, the ongoing conflict in Ukraine and the escalating violence in the Middle East are expected to strain the EU’s policymaking capabilities and divert resources from its Indo-Pacific ambitions.[48] Furthermore, the EU’s overreliance on the North Atlantic Treaty Organization (NATO) for its defence raises questions about its commitment to security cooperation with Southeast Asia. With the possibility of a second Donald Trump US presidency on the cards following the upcoming US Presidential elections, EU members may face increased pressure to bolster their defence spending,[49] further complicating the EU’s strategic posture.
Indeed, despite its lofty ambitions to play a security role in the Indo-Pacific, the EU’s security endeavours have unfolded in a piecemeal manner that is primarily led by larger member states, with Germany and France accounting for 79% of all arms transfers from EU countries to the region between 2019 and 2023 (see Figure 7).
Figure 7: Breakdown of Arms Transfers to Southeast Asia by EU member states respectively (2019-2023
Source: Stockholm International Peace Research Institute (SIPRI) Arms Transfer Database[50]
Similarly, despite its pledges to increase its naval presence in the Indo-Pacific, France remains the main driver of the EU’s naval efforts (see Figure 8). In 2023 alone, France led the EU by participating in 8 military exercises with Southeast Asian countries. However, it continues to trail middle powers in the region which have a more established naval presence, such as Australia and the United Kingdom (UK).
Figure 8: Number of Regional Military Exercises observed or participated in among external powers in 2023
Source: Data compiled by authors
STRENGTHENING EU’S RELEVANCE IN THE REGION
While the EU may face challenges in realising its security ambitions, it still holds some sway in the region and may yet find its sweet spot. Its steadfast role as a normative and economic partner has fostered trust among Southeast Asian states.
The EU has room for improvement if it wishes to make good on its Indo-Pacific strategy. Squaring away its trade disputes with countries in Southeast Asia is a tricky fruit for the EU to pick. However, the EU can recalibrate its balancing of principles and pragmatism by recognising the practical limitations that Southeast Asian countries have in complying with its regulations. Instead of expecting ASEAN to achieve EU trade standards outright, the EU can facilitate economic developments across the region through capacity-building programmes aimed at harmonising regulatory standards within ASEAN.
Rather than focusing on hard security, a domain better suited to its most capable member states,[51] the EU can focus its strengths on areas of non-traditional security. These include cybersecurity, food security, combatting Illegal, Unreported and Unregulated (IUU) fishing, climate change mitigation, sustainable development, and the regulation of emerging technologies such as AI governance and data protection.
In sum, the EU has been a steadfast partner for Southeast Asian countries and has fared well as a normative and economic power in the region. By working on its trade relations, prioritising pragmatism and focusing on areas of strength, the EU can remain a relevant and reliable middle power in Southeast Asia.
Annex A
Summary of Relations between ASEAN Member States – EU
| AMS | Key Agreements Signed with EU | Key Agreements in Progress | Bilateral Issues with the EU |
| ASEAN | EU-ASEAN Strrategic Partnership EU-ASEAN Plan of Action 2018-2022 EU-ASEAN Cooperation Agreement EU-ASEAN Comprehensive Air Transport Agreement | EU-ASEAN FTA | |
| Brunei | EU-Brunei Partnership and Cooperation Agreement (PCA) | HUMAN RIGHTS: EU Parliament condemned the entry into force of the Sharia Penal code due to human rights concerns | |
| Cambodia | EU-Cambodia 1977 Cooperation Agreement | HUMAN RIGHTS: EU Commission withdrew part of tariff preferences under Everything but Arms (EBA) scheme due to human rights issues. HUMAN RIGHTS: EU Parliament adopts resolution regarding political persecution and human rights violations | |
| Indonesia | EU-Indonesia Comprehensive Economic Partnership Agreement | BIOFUELS: Dispute over palm oil HUMAN RIGHTS & DEMOCRACY: EU Parliament “expressed concern” over proposed Indonesian criminal code | |
| Laos | EU-Laos 1997 Cooperation Agreement Everything But Arms (EBA) Trade Initiative [Not agreement] | HUMAN RIGHTS: EU notes human rights concerns on displaced people from dam construction, sexual exploitation of children HUMAN RIGHTS: EU “raised concern” about lack of progress on human rights issues | |
| Malaysia | EU-Malaysia Partnership and Cooperation Agreement (PCA) | EU-Malaysia FTA | BIOFUELS: EU Commission launched the Renewable Energy Directive which led to disputes about biofuels such as palm oil HUMAN RIGHTS & DEMOCRACY: EU Parliament has condemned the use of the death penalty, the lack of LGBTQ Rights and no freedom of speech |
| Myanmar | Everything But Arms (EBA) Trade Initiative [Not agreement] | DEMOCRACY: Sanctions and condemnations due to military coup HUMAN RIGHTS: Condemnations due to Rohingya Crisis | |
| Philippines | EU-Philippines Partnership and Cooperation Agreement (PCA) Agreement on finding a “peaceful and inclusive solution” to SCS GSP+ trade preferences scheme | EU-Philippines FTA | HUMAN RIGHTS: The Philippines “reminded” to comply with Human Rights standards as part of its commitment to the GSP+ Agreement HUMAN RIGHTS: Threatened to withdraw temporarily GSP+ Preferences (but no action yet) HUMAN RIGHTS: Strongly condemned extrajudicial killings and human rights violations in Duterte’s war on drugs |
| Singapore | EU-Singapore Partnership and Cooperation Agreement (EUSPCA) EU-Singapore Free Trade Agreement (EUSFTA) EU-Singapore Investment Protection Agreement (EUSIPA) EU-Singapore Digital Partnership (EUSDP) | HUMAN RIGHTS: EU Parliament calls for the abolition of the death penalty | |
| Thailand | EU-Thailand 1980 Framework Agreement EU-Thailand Partnership and Cooperation Agreement | EU-Thailand FTA | HUMAN RIGHTS: EU Parliament adopted “several resolutions” condemning Human Rights and migrant/labour rights violations |
| Vietnam | EU-Vietnam Partnership and Cooperation Agreement (PCA) EU-Vietnam Free Trade Agreement EU-Vietnam Investment Protection Agreement EU-Vietnam Framework Participation Agreement EU-Vietnam Sustainable Energy Transition Programme (SETP) | HUMAN RIGHTS & DEMOCRACY: EU Parliament adopted a resolution on Vietnam for unlawful arrest of human rights activists and journalists |
Source: European Parliament Fact Sheets on the European Union: Southeast Asia[52]
ENDNOTES
For endnotes, please refer to the original pdf document.
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