Why It’s Time To Revive The East Asian Economic Grouping (EAEG)?
By Dato Dr. Ilango Karuppannan
Former U.S. President Donald Trump’s decision to impose tariffs on 60 countries signals a broader shift toward economic fragmentation and protectionism. This is not just about countering China or protecting American industries—it represents a systematic dismantling of the post-World War II trade order, which was built on openness through institutions like GATT and the WTO.
In response, major economies such as China and the European Union are considering countermeasures, increasing the risk of a world economy divided into competing trade blocs. If this trend continues, global trade as we know it could unravel, with national interests taking precedence over international cooperation.
Amid these disruptions, it is time to revisit an idea that was ahead of its time—the East Asian Economic Grouping (EAEG), first proposed by Malaysia in 1991. Although the initiative never materialized due to strong U.S. opposition, the changing global landscape makes it more relevant than ever.
The Forgotten Vision of 1991
The EAEG was first proposed by Malaysia’s then-Prime Minister Mahathir Mohamad in 1991. He envisioned the EAEG as a way to strengthen economic ties among East Asian nations, reducing reliance on Western-led institutions. It was designed to complement, rather than replace, existing global frameworks.
However, the United States saw the proposal as exclusionary and lobbied aggressively against it. Japan, the country Malaysia had hoped would take the lead, declined to support the initiative. Under pressure, the idea was abandoned in favour of ASEAN+3, a looser framework that included China, Japan, and South Korea but lacked deep economic integration.
Today, the global economic centre of gravity has shifted toward Asia. Unlike in 1991, when East Asia lacked a clear economic leader, China has emerged as a dominant force capable of driving regional integration. This presents an opportunity to revive and expand the EAEG with a more inclusive membership that extends beyond East Asia.
Why an Expanded East Asian Economic Grouping is Needed Now
East Asia remains one of the most dynamic economic regions in the world. ASEAN, China, Japan, and South Korea collectively account for a substantial share of global GDP and trade. While Western economies turn inward, East Asia has the opportunity to take the lead in preserving open trade and strengthening economic resilience.
The Regional Comprehensive Economic Partnership (RCEP) is a step in this direction, but it is essentially an ASEAN-China framework. What is needed is a broader, more structured economic bloc that is not geographically limited.
Natural partners such as India, Australia, and New Zealand should be considered, given their economic ties to the Indo-Pacific. Other economies could also be included if they demonstrate a commitment to free trade.
A well-structured EAEG would allow member nations to mitigate the risks posed by Western trade wars and economic coercion. It would serve as a counterbalance to U.S. protectionist policies and enhance regional supply chain security. Most importantly, it would give participating countries greater leverage in negotiating trade agreements on their own terms rather than being forced to react to shifting Western policies.
A Rotating Leadership Model?
In 1991, Malaysia envisioned Japan leading the EAEG. Today, that role would naturally fall to China.
China is already the largest trading partner for most ASEAN nations and possesses the economic weight, industrial capacity, and financial resources to drive this initiative forward. However, a China-led grouping would likely face resistance from the United States and could also raise concerns among ASEAN members, who wish to avoid taking sides in great-power rivalries.
To address this challenge, the EAEG could adopt a rotating leadership model among its members. This would ensure that no single country dominates the bloc while allowing all members to contribute to its strategic direction. Such a structure would help balance economic cooperation with geopolitical realities, making the EAEG more inclusive and sustainable in the long run.
Conclusion: Seizing the Moment for a Stronger Economic Bloc
Malaysia’s vision in 1991 was ahead of its time. But with rising protectionism and the growing fragmentation of global trade, the moment has come to revive and adapt this idea.
East Asia and its partners cannot afford to wait for the U.S. policies to irreversibly damage the global trading system. They must take the lead in preserving the open, trading system that had lifted millions out poverty.
A reimagined East Asian Economic Grouping—broader, more strategic, and open to committed partners—would not only counter the risks of trade wars and economic coercion but also contribute to a more stable and prosperous global economy.
The question is: Will Asia and its partners seize this opportunity to build a regional economic bloc that keeps trade open? Or will they allow the global trading system to fragment beyond repair? The choice is ours.
Dato Dr. Ilango Karuppannan is a former diplomat and adjunct professor at the International Institute of Public Policy and Management, Universiti Malaya.