The ASEAN’s Green Trade Policy in Response to EU CBAM: A Comparative Study of Indonesia and Vietnam

The European Union’s Carbon Border Adjustment Mechanism (CBAM), part of the “Fit for 55” package, embeds carbon accountability into global trade. This study examines how Indonesia and Vietnam, two ASEAN member states, respond to CBAM through differing green trade strategies. Based on qualitative document analysis (2019–2025), it finds that Vietnam has taken a proactive approach, introducing emissions monitoring, pilot Emissions Trading Systems (ETS), and clean energy investments, spurred partly by the EU-Vietnam Free Trade Agreement (EVFTA). Conversely, Indonesia’s response remains fragmented, constrained by fossil fuel reliance, delayed carbon tax implementation, and institutional challenges, despite involvement in the Just Energy Transition Partnership (JETP). The paper also explores ASEAN’s emerging but limited institutional response, such as the ASEAN Taxonomy for Sustainable Finance and the ASEAN Strategy for Carbon Neutrality. Though largely aspirational, proposals for an ASEAN CBAM Task Force and regional carbon market suggest growing momentum for policy coordination. Using theories of regulatory diffusion and complex interdependence, the study argues that ASEAN’s collective action is key to harmonizing national policies, reducing trade frictions, and improving regional competitiveness. This research contributes to discussions on green industrial policy in the Global South and highlights the role of regional organizations in navigating transnational climate rules.