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, and 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.