The European Union is ASEAN’s third largest trading partner after China and the United States and its third largest source of direct foreign investment, with last year’s total merchandise trade reaching about $320 billion.

It’s a formidable number, which both sides would like to improve upon and the EU is negotiating free trade agreements (FTAs) with Thailand, Malaysia, The Philippines after successfully signing such deals with Indonesia, Singapore, and Vietnam.

Chris Humphrey, executive director of the EU-ASEAN Business Council, spoke with The Diplomat’s Luke Hunt about the status of current FTA negotiations and issues including counterfeit goods, labor rights, environmental standards, and protectionism.

In regards to counterfeit goods, he noted that ASEAN’s top six economies – Singapore, Malaysia, Indonesia, Thailand, Philippines, and Vietnam – lost as an estimated $13 billion to illicit tobacco products over the past two years.

Indonesia accounted for more than $5 billion of those losses while more than half of cigarettes sold in Malaysia were illicit – making it the only market where illicit cigarettes outnumbered legal sales.

“So there are things that need to be resolved. But to be fair to the ASEAN member states, they are working to resolve them,” he said.

Negotiations with Myanmar for an FTA were initiated in 2014 but are on hold amid the civil war and Humphrey also points to organized crime and scam compounds as damaging its image abroad, in a similar way to Cambodia and Laos.

But he remains optimistic about Cambodia and its plans to leave the ranks of the least developed countries by the end of the decade, if it can purge the country of scam compounds and human trafficking networks.

“Cambodia has got one of the fastest growing economies in Southeast Asia. It will naturally start to attract more foreign direct investment going forward. But companies will be wary of dealing with a country that has reputational damage,” he said.

Humphrey, who has run the EU-ASEAN Business Council since its formal inception in 2014, also spoke about the impact of the conflict between Cambodia and Thailand, the closure of their border, and its impact on trade.

He also talks about the disproportionate affects the Israel-U.S. war in Iran is having on the region, particularly in terms of inflation and its impact on the broader economies from the price of energy to food costs.

Marcus Tantau, a senior associate at Templeton Research, returns to Beyond the Mekong for an update on the outlook for ASEAN economies as the crisis in the Middle East persists with the costs of the Israel-U.S. war on Iran hitting government expenditure across the region.

Tantau spoke with The Diplomat’s Luke Hunt about ASEAN’s outlook for 2026 in January. For this update he has revised his numbers.

The cost of oil and shipping remains key. The World Bank had cut around one percentage point off regional GDP forecasts for the year, but this could rise substantially in the event of a severe, long term blockade of the Strait of Hormuz. That, combined with inflationary costs, has raised the prospect of stagflation, a significant problem for economists and politicians attempting to steer economies through turbulent times.

Chris Catto-Smith is a logistics specialist, a career that began with the Royal Australian Air Force in the 1970s. He then moved into the private sector and used his experiences in Southeast Asia and the Pacific Islands, helping farmers and small businesses in getting their goods to market.

It’s a difficult job made harder by the U.S.-Israeli war in Iran that has upended oil deliveries through the Straits of Hormuz, which Catto-Smith says has led to “vessel bunching” out of ports like Singapore resulting in supply chain disruptions and lengthy delays.

As a result, perishable goods are rotting before they can be delivered and that is punishing financial returns for farmers at the gate and leading to higher prices in Southeast Asian markets where people by their food.

Catto-Smith, managing director of Freshport Asia, returns to Beyond the Mekong where he spoke with The Diplomat’s Luke Hunt in Kampot, Cambodia, about the issues confronting supply chains and what can be done to mitigate the impact of the war in Iran.

This is in addition to his usual work which aligns with Corporate Social Responsibility, or CSR, where he focuses on cold storage and the logistics needed in remote areas, where crops are grown but infrastructure and post-harvest skills required for market are lacking.

Joseph Lo Bianco is president of the Australia Myanmar Institute and a professor emeritus from the University of Melbourne in linguistics, with a sharp focus on the ever evolving civil war in Myanmar, the politics behind it and the prospect of a future federal government.

While the junta has deployed a new propaganda unit to tell the good news about a war that has cost about 93,000 lives, opposition ethnic armed organizations (EAOs) have been writing constitutions and forming governments and administrations to run their respective states.

Then there’s the opposition in exile, National Unity Government (NUG) which – despite its differences with the EAOs and its allied People’s Defense Force – remains the only viable political outfit with a nationalist agenda for Myanmar.

“The NUG does have a well worked out policy about federalism, they have taken this seriously,” Lo Bianco told The Diplomat’s Luke Hunt, adding that this is about delivering the decision making process closer to the people in a country where some 130 languages are spoken.

“Federalism doesn’t mean just one thing and Myanmar has to work this out,” he said. “It’s complex. The disadvantages are obvious. You can’t compare Rakhine with Mon or Chin states. Kachin is a huge and has a dominant language.”

Under Senior General Min Aung Hlaing the junta has full authority over just 21 percent of Myanmar, according to the Council on Foreign Relations. EAOs and the PDF hold 42 percent, while the balance is in dispute.

The Chinland Council and the Karen National Union have written constitutions and a rules-based order while the Arakan Army has seized control of most Rakhine State and built judicial and taxation systems while operating as a de facto government.

Other EAOs are heading down the same path while a declaration of independence by an eastern Karen splinter group led by Gen. Nerdah Mya and known as the Republic of Kawthoolei has been dismissed by the KNU and others as bereft of any legitimacy.

The buzz-phrase is bottom-up federalism and Lo Bianco adds: “After all the fighting it has to happen. It may not be imminent but it is inevitable."

Michael Martin returns to Beyond the Mekong following the outbreak of the Israeli-U.S. war on Iran, which is having a profound impact across the world and on ASEAN, where oil prices have surged, supply chains are being severely disrupted, and the costs are being borne by ordinary people.

Martin, who has retired as a specialist in Asian affairs for the Congressional Research Service of the Library of Congress and at the Center for Strategic and International Studies (CSIS), spoke with The Diplomat’s Luke Hunt in Bangkok about the war and Trump’s foreign policy intentions.

This includes the prospects for Myanmar, which Amnesty International says is believed to have been supplied with aviation gasoline by Iran. Iranian fuel enabled the military’s relentless aerial bombing campaigns that has left thousands of civilians dead amid a five-year civil war.

Canadian archeologist Dougald O’Reilly and his team were widely credited with solving the mysteries surround the Plain of Jars in northeast Laos, a vast megalithic landscape of massive stone jars scattered in clusters, dating to the Iron Age, around 500 BCE to 500 CE.

O’Reilly, a professor at the Australian National University in Canberra, has also released his latest book "Empires of the Southern Ocean," which traces state-level societies across Southeast Asia, encompassing modern-day Myanmar, Malaysia, Indonesia, Cambodia, Thailand, and Vietnam.

He spoke with The Diplomat’s Luke Hunt about his discoveries at the Plain of Jars, which have besotted and mystified archeologists, explorers, and tourists for centuries and the issues confronted by his team in preserving the site.

Marcus Tantau is a Senior Associate at Templeton Research, where he leads the firm’s Southeast Asia practice from Singapore. He specializes in corporate investigations and strategic intelligence and advises financial institutions on how to navigate complex risks.

He spoke with The Diplomat’s Luke Hunt on a broad range of topics, including the election of To Lam as Vietnam’s president and Communist Party chief, and how regional leaders are faring, among them Malaysia’s Anwar Ibrahim, Indonesia’s Prabowo Subianto. and Ferdinand Marcos Jr. of the Philippines.