South Korea-China-Japan to Boost Free Trade
South Korea, China, and Japan held their first economic dialogue in five years, aiming to boost regional trade amid concerns over U.S. President Donald Trump’s new tariffs.
The three nations agreed to strengthen cooperation on the South Korea-Japan-China free trade agreement (FTA) and enhance the implementation of the Regional Comprehensive Economic Partnership (RCEP).
The talks come ahead of Trump’s anticipated announcement of further tariffs, including a 25 percent levy on car imports, which could impact major Asian automakers. Despite past tensions, the ministers committed to further discussions, with the next meeting set to take place in Japan.
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Australia Redirects US$100mn Aid to Indo-Pacific
Australia will redirect over US$100mn in foreign aid to the Indo-Pacific, addressing urgent funding gaps following Donald Trump’s decision to cancel US$54bn in U.S. aid programmes.
The 2025-26 aid budget rises to US$5.1bn, up US$135.9mn, with US$119mn repurposed for economic, health, humanitarian, and climate support in the region. Foreign Affairs Minister Penny Wong described it a “hard strategic decision” in response to the U.S. aid pause.
75 percent of the budget targeting the Indo-Pacific, including US$1bn over five years for economic resilience. The funding cuts have affected UN agencies and global health bodies, raising concerns over regional stability.
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Trade and Economic Affairs
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Australia Chair of the CPTPP in 2025
On January 01, 2025, Australia assumed the Chair of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), aiming to enhance trade and economic opportunities across its membership.
Under the theme ‘Delivering Sustainable Trade and Resilient Growth,’ Australia will focus on three key priorities: increasing trade by leveraging the agreement’s high standards, facilitating trade through improved processes, and ensuring the benefits of trade are inclusive and sustainable.
Australia sees 2025 as a vital opportunity to drive outcomes that strengthen regional integration and promote equitable economic growth.
(DFAT, 01.01.25)
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Japan’s Trade Grows in January Amid Tariff Fears
In January 2025, Japan reported a trade deficit of ¥2.76tn (US$18bn), a 60 percent increase from January 2024, according to its Finance Ministry. Exports rose by seven percent year-on-year to ¥7.86tn, driven by machinery, medical goods, and ships.
However, imports surged by 16.7 percent to ¥10.62tn due to higher demand for machinery, computers, and food, compounded by a weaker yen. Japan posted a ¥477bn (US$3bn) surplus with the U.S., with exports of electrical equipment and cars rising by eight percent. Japan is urging the U.S. to exempt it from potential reciprocal tariffs and existing steel and aluminium duties.
(AP, 19.02.25)
Korea-Germany Indo-Pacific Dialogue Launched
South Korea and Germany held their inaugural Indo-Pacific Dialogue in Seoul, led by Korea’s Special Representative Eui-hae Cecilia Chung and Director General for Asia and the Pacific at the German Federal Foreign Office, Frank Hartmann. The talks focused on regional peace, the Indo-Pacific’s linkage with European security, and cooperation on climate, cybersecurity, and the environment.
Both sides reaffirmed their commitment to joint action, with Korea welcoming Germany’s 2024 accession to the UN Command. This marks Korea’s second bilateral Indo-Pacific dialogue with a European nation, part of its broader effort to institutionalise strategic cooperation across the region with like-minded partners based on shared values and inclusive principles.
(MOFA, 10.03.25)
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U.S. Eyes Penalties on Chinese-Built Ships
The U.S. is considering substantial fines for container ships made in China, potentially charging up to US$1.5mn per port call. Business groups warn that such penalties could severely disrupt agricultural exports and supply chains, with an estimated 98 percent of the global fleet affected.
The proposed fees would significantly increase shipping costs, disrupt global trade routes, and may force carriers to divert shipments to Canadian ports. Industry experts caution that the move could harm American exporters more than it would incentivise domestic shipbuilding.
(CNBC, 24.03.25)
India's Export Surge Amid Global Trade Opportunities
Despite geopolitical uncertainties, India is poised to cross US$800n in exports this year, according to Director General of Foreign Trade (DGFT) Santosh Kumar Sarangi. The current global landscape presents a golden opportunity for India to enhance manufacturing competitiveness and expand international trade.
Initiatives like production-linked incentive (PLI) schemes are enhancing domestic manufacturing, while 'Sourcex India 2025' connects over 150 global buyers from 45+ countries. The government is actively pursuing new market access through FTAs, positioning India as a dynamic force in the global economic ecosystem.
(ZB, 27.03.25)
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Philippine, Japan to Boost Defence Ties
On February 24, 2025, Japan and the Philippines agreed to deepen defence cooperation amid growing regional tensions in the Indo-Pacific. Japanese Defence Minister Gen Nakatani met with his Philippine counterpart Gilberto Teodoro in Manila to discuss maritime security in the East and South China Seas.
The two nations will expand military exchanges, establish a high-level strategic dialogue, and enhance information sharing. This builds on a 2023 military pact allowing reciprocal troop deployments and Japan’s provision of coastal radars under its security assistance programme. The partnership reflects shared concerns over China’s assertiveness and aims to strengthen regional peace and stability.
(Reuters, 24.02.25)
G7 Slams China's Maritime Moves
The G7 has strongly criticised China's actions in the South China Sea and near Taiwan, accusing Beijing of provocative and dangerous maritime behaviour. China responded vehemently, calling the G7 statement as "arrogant and malicious". The diplomatic row underscores ongoing tensions over territorial claims, with China challenging international maritime norms through military exercises and territorial expansions in strategic waterways.
China claims a vast portion of the South China Sea, through which approximately US$5tn in global trade passes annually. The dispute involves multiple countries, with China routinely deploying ships and aircrafts near Taiwan and constructing military bases on artificial islands, raising major international concerns about regional stability.
(TI, 15.03.25)
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India, New Zealand Deepen Indo-Pacific Alliance
Prime Ministers Narendra Modi and Christopher Luxon reaffirmed their commitment to a "free, open and secure Indo-Pacific" during talks in New Delhi. The leaders signed a defence cooperation pact, emphasising development over expansionism and pledging joint efforts to counter terrorist and radical elements in the region.
This strategic dialogue underscores the growing importance of bilateral relations between India and New Zealand, highlighting their shared geopolitical interests and mutual desire to promote regional stability.
(HT, 17.03.25)
U.S., China Show Force in Indo-Pacific
Satellite images from Maxar Technologies show China deploying H-6 bombers near Scarborough Shoal in the South China Sea, a contested area within the Philippines’ Exclusive Economic Zone (EEZ), controlled by China since 2012 despite a 2016 Hague ruling against its claims.
The deployment coincided with U.S. Defence Secretary Pete Hegseth’s visit to Manila, where he reaffirmed America’s “ironclad” treaty commitment, announcing NMESIS missile systems and special forces exercises in Batanes.
Meanwhile, the U.S. deployed B-2 stealth bombers to Diego Garcia, bolstering its Indo-Pacific presence amid operations against Houthi attacks in Yemen, signalling deterrence to China and regional adversaries.
(ET, 29.03.25)
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EU Joins Indo-Pacific Oceans Initiative
Prime Minister Narendra Modi welcomed the European Union’s decision to join the Indo-Pacific Oceans Initiative, launched by India in 2019 to promote regional cooperation and a rules-based order.
At a joint press conference with European Commission President Ursula von der Leyen, both leaders highlighted growing defence and security collaboration, including in maritime security, cyber security, and counter-terrorism.
They discussed expanding joint naval exercises and protecting undersea data cables. Modi described the India-EU strategic partnership as “organic and natural” and expressed optimism about concluding an FTA by end of 2025.
(TT, 20.02.25)
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Chung-Hua Institution for Economic Research (CIER)
On March 04, 2025, Taiwan ASEAN Research Centre, Chung-Hua Economic Research Institute co-hosted with Chinese National Federation of Industries a Closed-door Industry Roundtable on the topic of Trump’s Trade and Industrial Policy: Implications for Taiwan and the Outlook for U.S.-Taiwan Cooperation. The Taiwan ASEAN Research Centre, CIER is also a member institution Taiwan-Asia Exchange Foundation (TAEF) and attended their annual signature event – Yushan Forum on March 18 and 19.
CIER also publishes annual economic outlooks covering a range of important contemporary economic topics. Our March 2025 economic outlook focus on the topic of “Made in China 2025”, includes articles on “Observing the Effectiveness of Made in China 2025”, “Causes and Trends of China's Overcapacity”, “China's Strategies to Overcome Overseas Technology Blockades” and more. It can be accessed here.
Additionally, CIER collaborated on a new Konrad-Adenauer-Stiftung (KAS) publication titled “The Indo-Pacific Economic Framework for Prosperity (IPEF) Supply Chain Agreement on De-risking Supply Chain Disruptions and Implications on Non-Members – A Taiwan Perspective ”, which can be accessed here.
Information Technology and Innovation Foundation (ITIF)
ITIF focuses on a host of critical issues at the intersection of technological innovation and public policy — including economic issues related to innovation, productivity, and competitiveness; technology issues in the areas of information technology and data, broadband telecommunications, advanced manufacturing, life sciences, and clean energy; and overarching policy tools related to public investment, regulation, taxes, and trade.
It published a report on Toward Globalisation 2.0: A New Trade Policy Framework for Advanced-Industry Leadership and National Power
Institute of South Asian Studies (ISAS)
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Hinrich Foundation
Japan Research Institute (JRI)
JRI is a 'knowledge engineering' company with three functions: think tank, consulting, and IT solutions. With the core principle of 'co-creating new customer value', JRI identifies issues, makes concrete proposals to solve them, and supports their implementation. In this quarter, JRI, Embassy of India in Japan, and Sumitomo Mitsui Banking Corporation (SMBC) held a co-sponsored symposium entitled "Economic Security and Supply Chain Resilience: Enhancing India-Japan Cooperation" in March.
The symposium opened with welcome remarks from Katsunori Tanizaki, President of JRI and H.E. Sibi George, Ambassador of India to Japan. Next, Yoshihiro Hyakutome, Senior Managing Executive Officer of SMBC, took to the stage. A video message from H.E. Minori Kiuchi, Minister in charge of Economic Security, was also presented.
Australian Risk Policy Institute (ARPI)
January - March 2025 has seen the most impactful quarter for many years in terms of geo-political and geo-strategic prominence - which aligns with ARPI®’s approach that everything we see and do must be viewed in the context of ‘whole systems. Global ‘whole systems’ including but not limited to: Competition and Consumer Policy: Interconnected meta-grid of Information Technology: Leadership paradigm changes to enhance resilience of critical infrastructure, Supply Chain protection, geo-strategic map of Earth Systems and more.
All priorities of the Centre for Advanced Resilience and Risk Policy Studies (CARRPS) comprising members from around the world in the Global Risk Policy Network. It works at three levels: Global need and intent; Geo-political and geo-strategic consequences of success and failure; and Innovative solutions.
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Dr. Tess Newton Cain*
Principal, TNC Pacific Consulting
Tess Newton Cain is an esteemed academic, consultant, and researcher with over 25 years of experience in Pacific governance, development, and security. Through her research, analysis, and policy advisory work, Tess collaborates with a diverse range of stakeholders to support strategic development initiatives across the region. Her experience spans a broad network of policy makers, development organisations, and community leaders, enabling her to contribute insights that address key regional challenges and opportunities.
As a consultant, Tess has partnered with major organisations such as the United Nations, the World Bank, the International Finance Corporation, the Asian Development Bank, and various government agencies in Australia, New Zealand, and the Pacific. She has also advised the Pacific Islands Forum Secretariat, the Lowy Institute for International Policy, and other development-focused entities.
* Affiliated with Forum in a personal capacity
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Source: AP: Associated Press; DFAT: Department of Foreign Affairs and Trade, Australia; ET: EurAsian Times; HT: Hindustan Times; MOFA: Ministry of Foreign Affairs, Republic of Korea; TI: The Independent; TT: The Tribune; ZB: Zee Business
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