Framing Trade Policy Preferences and Dialogues in ASEAN Economic Integration: The Case of The Automotive Industry

An exposure to international trade through an economic integration initiative potentially creates winners and losers at the domestic level. This chapter highlights the policy preferences and policy dialogues amongst stakeholders that shaped ASEAN economic integration within the automotive industry in Indonesia by tracing the economic integration process and critically reflects on the often-neglected competing interests, and policy agenda settings. Policy preferences are defined as state motivation to pursue economic integration on the regional level, while policy dialogue is a domestic political process that involves various groups namely internationalist and backlash coalitions. Focusing on the automotive industry as an illustrative case, this chapter utilizes the qualitative approach of process tracing as a strategy to collect the data from key interviewees (government and private sector). Given the low intra-trade interaction in ASEAN, the analysis suggests that economic interdependence in sector-specific trade as the main driving force constructing policy preference. By eliminating trade barriers in the automotive industry, political elites aim to transfer domestic policy preferences to the regional level in order to secure domestic support through wealth-creation. Integrated ASEAN economies could contribute significantly to the development of the automotive industry with crucial improvements for a member country's income per-capita. The policy dialogue process traced shows that Indonesian domestic political-economic interaction was in diverged opinions between the internationalists that fully support integration and the backlash that approach economic integration cautiously. The latter perceived non-tariff barriers as an acceptable strategy to protect the domestic economic interest. However, both actors' strategies are constrained by their power, authority, as well as bargaining over the needs to address certain internal and external issues.