External conditions for EU normative power through trade: the case of CEPA negotiations with Indonesia

The European Commission has emphatically declared that the EU is committed to harnessing globalization by promoting a normative approach to trade. Based on the case study of the ongoing negotiations for a Comprehensive Economic Partnership Agreement (CEPA) with Indonesia, this paper scrutinizes the external conditions for the effectiveness of the European Union (EU) as a norm promoter. Despite the preference of the government to conclude the deal, so far, Indonesia has avoided taking a position on EU-sponsored norms concerning an investment court system and biofuel sustainability standards. This paper explains such a cautious attitude from an international political economy perspective. The proliferation of trade agreements concluded by the EU in the Association of South East Asian Nations (ASEAN) has mobilized the umbrella organization representing Indonesian exporter firms, which has a preferential status as interlocutor of the trade ministry, in support for the European proposals. At the same time, the low degree of trade dependency of the country has empowered Indonesian firms that enjoy the benefits of the large domestic market and, therefore, are in favor of the status quo. Indonesian civil society organizations are also divided on the opportunities and risks associated to the European normative approach to trade. This case study shows how the attempt of the EU to emerge as a normative power through trade has to face the complex political economy incentives and constraints shaping the trade policy of its negotiating partners