Industrial policy in Asia-Pacific integration: localization measures and subsidies in ASEAN countries

ABSTRACT As part of Asia-Pacific regionalism, the Association of Southeast Asian Nations (ASEAN) is in the process of establishing a single market. ASEAN member states conduct their industrial policies on their own but are also guided by the ASEAN legal framework. Having once been in the mainstream of government economic interventions, localization measures still continue to be in use in this region and today affect not only manufacturing but also data-reliant industries, erecting barriers to the advancement of the Fourth Industrial Revolution. Southeast Asian countries, like many others, have widely utilized various forms of subsidies as a means of promoting domestic industries. Because of their trade-distortive effects, localization measures and subsidies are disciplined by the World Trade Organization. With the focus on ASEAN member states, this article discusses localization and subsidy issues as addressed under trade rules and outlines some tasks for the ASEANization of industrial policies to deepen regional integration and strengthen ASEAN’s unity.