Harvesting Opportunity or Sowing Inequality?

How the ASEAN-China Trade Pact Is Reshaping Southeast Asian Agriculture

by Donny Rosario

AGRONOMICS

In the lush fields stretching from Vietnam’s deltas to the rice terraces of Thailand and the sprawling plantations of Indonesia, an economic tide is reshaping the landscape of agricultural trade. A recently released study in the Agriculture and Development Notes series by the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) offers a clear—and at times surprising—picture of how the ASEAN-China Free Trade Agreement (ACFTA) has impacted farming economies across Southeast Asia.

Signed in the early 2000s and put into force with gusto by 2005, the ACFTA aimed to unlock deeper commercial integration between the ten member states of the Association of Southeast Asian Nations (ASEAN) and the People’s Republic of China. Under its framework, tariffs on the majority of goods—including rice, fruits, and other agricultural commodities—were radically reduced or eliminated altogether, ushering in what proponents hoped would be a golden age of cross-border trade.

But as the SEARCA study “Trade Creation or Diversion? Assessing the ASEAN-China Free Trade Agreement’s Uneven Impact on ASEAN Agricultural Trade” reveals, the fruits of this agreement have ripened unevenly. While total trade between ASEAN and China has soared roughly fourfold since the pact took effect, agricultural trade has grown even faster—nearly fivefold—highlighting just how pivotal agriculture remains in regional commerce.

Yet beneath these headline figures lies a stark divergence in how individual countries have benefited—or been sidelined.

Winners, Stragglers, and Those Left Behind

Take Vietnam, for example. In the SEARCA researchers’ eyes, Vietnam stands out as the pact’s star performer. The nation has not only expanded agricultural trade within ASEAN but has also dramatically increased exports and imports globally. Its success isn’t accidental; it reflects strategic investments in production capacity, infrastructure, and policies that align domestic agriculture with global market demands.

Indonesia and Thailand also recorded noteworthy gains. Both countries boosted net agricultural trade within the region, showing that with the right domestic conditions, the ACFTA can serve as a powerful engine for growth.

But the story isn’t uniformly uplifting.

Malaysia and the Philippines, for instance, didn’t see a dramatic jump in trade within the ASEAN-China framework. Instead, much of the increased agricultural activity for these nations occurred through markets outside the ACFTA bloc—suggesting that free trade with China did not translate into the kind of regional integration these countries might have hoped for.

Meanwhile, smaller economies—Brunei Darussalam, Cambodia, Lao PDR, and Myanmar—actually experienced what economists call “trade diversion.” Far from boosting agricultural trade within the ACFTA, these countries saw shifts in export and import patterns that favored partners outside the agreement, potentially weakening local industries rather than strengthening them.

Why Uneven Outcomes? The Roadblocks to Regional Growth

If the treaty has lowered barriers to trade, why have gains been so uneven?

According to the SEARCA analysis, the answer lies not in the agreement itself but in how countries are equipped to leverage it. Trade liberalization can open doors—but it doesn’t guarantee that all will walk through.

For nations like Vietnam, robust infrastructure, proactive agricultural policies, and investments in modernization have acted as force multipliers. Better irrigation systems, strong farm-to-market roads, and targeted support for farmers have enabled Vietnamese producers to reach regional and global markets with competitive products.

Elsewhere, however, structural weaknesses—like underdeveloped supply chains, limited access to technology, and gaps in extension services—have meant missed opportunities. Without a comprehensive strategy to build resilience and enhance productivity, many farmers are left vulnerable, unable to compete with cheaper imports or scale up exports effectively.

What Must Change: A Blueprint for Inclusive Growth

Rather than discarding free trade agreements wholesale, the researchers advocate treating them as strategic tools—powerful when paired with long-term planning and investment.

At the heart of this strategy is the call for national agricultural blueprints—holistic frameworks that bring together research, infrastructure development, human capital training, and evidence-based regulation. Such plans can help governments map out priorities and better prepare farmers to compete.

For example:

Mechanization: Empowering farmers with modern tools can boost productivity and reduce reliance on labor-intensive practices.

Infrastructure: Reliable farm-to-market roads and irrigation networks can reduce costs and open new commercial routes.

Human Capital: Training programs and extension services ensure that farmers understand market trends, quality standards, and new technologies.

Investments like these don’t just improve trade statistics—they strengthen rural economies, increase resilience to external shocks, and foster sustainable growth.

Looking Forward: Cultivating a Balanced Harvest

The SEARCA study sends a clear message: trade agreements like the ACFTA have transformed the agricultural trade landscape in Southeast Asia—but their benefits are not automatic or evenly shared. To turn policy into prosperity, countries must invest in the foundations that allow their agricultural sectors to thrive in an integrated global market.

For nations like the Philippines and Cambodia, this means re-imagining agricultural strategies with bold vision and actionable plans. For leaders across the region, it’s a reminder that economic integration works best when it uplifts all players, not just a fortunate few.

In the end, the real harvest from free trade will be measured not in tariffs waived, but in rural livelihoods transformed—and that will take both smart policy and sustained commitment.