Regional Free Trade Agreements Flourish Globally as Nations Diversify Supply Chains and Pursue Economic Resilience

Across the globe, nations are actively pursuing and expanding free trade agreements (FTAs) to enhance economic resilience and diversify supply chains. Hong Kong, for instance, maintains a robust free trade system, boasting nine FTAs with major economies including mainland China, New Zealand, and ASEAN, among others. The region is also strategically advancing negotiations for accession to the Regional Comprehensive Economic Partnership (RCEP), a move that could unlock new trading terms with key partners like Japan and South Korea. Additionally, Hong Kong has completed investment agreement negotiations with Qatar, Bangladesh, and Peru, while exploring new agreements with Saudi Arabia and Egypt. The trade and logistics sector played a significant role in Hong Kong’s economy, contributing approximately 18.8% to its GDP in 2025.

Further illustrating this global momentum, the UAE–Viet Nam Comprehensive Economic Partnership Agreement (CEPA), signed in October 2024, officially entered into force on February 3, 2026. This CEPA, comprising 18 chapters, is designed to eliminate tariff barriers, enhance market access for goods and services, and diversify supply chains between the two nations. It also fosters growth in services trade, investment expansion, strengthens the online environment for digital trade, and supports innovation through enhanced intellectual property rights protection.

This proactive pursuit of regional FTAs by many countries stands in stark contrast to the current trade landscape involving the United States. An analysis suggests that other nations are increasingly forming regional free trade agreements that deliberately exclude the United States. This trend is attributed to the impact of US tariff policies, which have led to higher prices and supply chain disruptions for US manufacturing firms and increased costs for US consumers. This phenomenon has been termed the “domino theory of regionalism,” where participating countries benefit while those left outside are disadvantaged, with US firms notably lacking a voice in these negotiations. This current US trade policy, including “Trump’s ‘Liberation Day’ tariffs announced on April 2, 2025,” marks a departure from historical US leadership on international trade, which once advocated for mutual lowering of tariff barriers to stimulate economic growth and job creation.