ASEAN economic ministers on Friday said the war in the Middle East was a growing threat to global energy security and could significantly slow regional growth.
“We expressed deep concern that the current disruptions to key maritime routes, particularly the Strait of Hormuz, where around one-quarter of global seaborne oil and liquefied natural gas (LNG) exports pass through, with over 80 percent destined for Asia, are posing severe risks to global energy security, fuelling persistent volatility in oil and LNG prices, and sharply increasing freight, insurance and logistics costs,” the Asean Economic Community Council (AECC) said in a statement issued following an April 30 special meeting.
“We recognized that the impacts of these shocks are extending beyond energy markets to generate inflationary pressures, exchange rate volatility, tighter global financial conditions and heightened uncertainty for businesses and investors,” they added.
“[T]o minimize disruptions to energy trade flows, we underscored the importance of maintaining secure and open sea lanes, ensuring freedom of navigation and the safe, unimpeded and continuous transit passage of vessel and aircraft in straits used for international navigation, in accordance with international law, including the 1982 United Nations Convention on the Law of the Sea.”
The AECC is responsible for coordinating the economic integration of the Association of Southeast Asian Nations. It is currently chaired by Trade Secretary Cristina Roque by virtue of the Philippines’ holding the Asean chairmanship this year.
In an online briefing on Thursday, Roque said that ministers had pledged to keep trade open as Asean economic stability was being affected in terms of energy supplies, logistics costs and food security.
“Asean agreed to avoid trade-restrictive measures, including export bans on essential goods. In times of uncertainty, predictability is stability, and stability begins with keeping goods moving across borders,” she said.
“Asean is strongest when it acts together, especially in times of uncertainty. As chair[man], the Philippines remains committed to ensuring our response remains practical, coordinated and focused on what matters most: people.”
With surging energy and transport costs affecting food systems, the ministers called for enhanced regional cooperation to prevent fertilizer supply disruptions and ensure availability of the critical agriculture input. They noted prior statements issued by other Asean ministers to ensure food security, including the use of the Asean Plus Three Emergency Rice Reserve.
They committed to implement and advance Asean agreements such as the changes to the Asean Trade in Goods Agreement and the Asean Plan of Action for Energy Cooperation and also noted a proposal to study regional oil stockpiling.
To support business in the region, the ministers pledged to support the diversification of markets and investment sources and leverage wider agreements such as the Regional Comprehensive Economic Partnership and conclude the Digital Economy Framework Agreement within the year.
The impact on the tourism sector was discussed, and the ministers urged targeted measures such as the promotion of energy-efficient transport systems and sustainable practices to sustain the industry’s competitiveness.
With the region operating in an increasingly volatile and uncertain environment, they said that prompt and well-coordinated policy responses were needed to safeguard macroeconomic stability.
“Deepened regional trade and financial integration, alongside broader market diversification, will further reinforce Asean economic resilience,” the ministers said.
As emergency measures may have to be adopted by individual members, they said that this “should be targeted, proportionate, transparent, temporary and should not create unnecessary barriers to trade and are consistent with WTO (World Trade Organization) and Asean rules.”
Senior economic officials and sectoral bodies were tasked with overseeing the priority measures identified during the AECC special meeting and assess the development of the regional strategy to address the economic impact of the war in the Middle East.
