Conflicting interest behind car row

By Makmur Keliat

JAKARTA (JP): After months of silence, Indonesia's ambitious national car program has become a contentious issue again.

The Indonesian government has issued a statement saying it is dissatisfied with Japan's unsympathetic filing of a complaint to the WTO.

Indonesia also implied Japan was merciless and selfish because it helped Japan solve its oil crisis in the 1970's.

Is it right to say that Japan is self-seeking? The answer is inconclusive and depends on your point of view.

If international relations were shaped by moral law, Japan's stance would be regarded as merciless and unsympathetic.

But the above assumption has two main shortcomings.

First, it is based on flimsy evidence if seen from a political realism viewpoint. In fact international relations are basically driven not by good offices but power struggles. Accordingly there is nothing wrong if every country is selfish.

The reason is very simple.

An elementary lesson one could pick up from the history of international relations is that it is marked neither by perpetual friends nor by eternal enemies but by the survival of the fittest. With this in mind it sounds bizarre and ridiculous to say Japan is uncompassionate and merciless.

It is also very naive to think that because Indonesia has done good things for Japan then Japan is morally obliged to return the favor.

The second paucity of the above assumption relates to empirical findings on trade disputes in international relations. In fact filing a complaint has become the norm in trade diplomacy.

Historical evidence shows that contrary to popular belief countries generally do not feel insulted if complaints are filed against them for GATT trade dispute resolution.

For instance, in 1950, at the fifth session of GATT, the Netherlands complained that British domestic tax was being applied unequally on foreign and domestic products in violation of GATT article III.

The Netherlands lodged the complaint after a series of bilateral discussions with the United Kingdom did not resolve the issue. Several other governments supported the complaint.

The British response is worth mentioning.

It admitted the Dutch charges were correct and promised to take action as soon as possible. And when the sixth session was held, and the British had not yet been able to take action, a special delegation led by Sir Hartley Shawcross the then British minister for trade affairs was sent to Geneva to explain. He said a major revision of tax laws was required and more time was needed.

The law was corrected by the seventh session.

Also at the sixth GATT session were two other complaints. One was filed by the United States on French export restrictions on hides and the second was a Belgian complaint about quantitative restrictions imposed by France and the United Kingdom.

The most interesting aspect of these two cases is that bilateral discussions on the issues had never been held and the litigant countries simply filed their complaints at the session.

But the charged countries were not insulted and both cases were settled bilaterally during the session.

It is true that history can not offer a sound model to understand and explain the current situation.

But it can offer us invaluable lessons and evidence that the filing of complaints and the gracious reactions within the GATT mechanism are a sign of the general acceptance of dispute resolution procedures, rather than humiliation.

In the light of this Japan's complaint is sensible, not frivolous, due to the very fact that Indonesia has imposed discriminatory practices against Japan.

By contrast Indonesia's recent statement seems an unusual and an exaggerated response, particularly given international trade diplomacy practices.

If this is the case the question we should ask is why has Indonesia overreacted and why is it so sensitive? Can you argue that it is because the national car program is an integral part of Indonesia's primary national interests?

For academics who put their faith in the concept of the national interest, the answer is certainly yes. They might even predict that Japanese assertiveness would be self-defeating in the long term because Indonesia might retaliate.

For these academics the answer is clear. To avoid retaliation and to protecting Japanese interests, both economic and security -- Indonesia's strategic position is of great importance for Japanese oil tankers sailing to and from the Middle East -- its best option would be to support Indonesia's national car program.

But the existing situation is not that simple if one believes in public choice.

If one takes this line of thinking then the answer is no doubt no, since others believe the term national interest describes a nebulous concept touted by politicians and bureaucrats to hide their personal interest.

In other words, this view negates the idea of equating national interest with public policy.

As a result the trade dispute between Japan and Indonesia about the national car program should not be interpreted as an indication of Indonesia's economic nationalism.

It merely shows conflicting interest between a small segment of the Indonesian elite circle with the Japanese business community.

Retaliation, therefore, would not automatically be a panacea because a cost-benefit analysis is needed to determine this. Retaliation could be counter-productive simply because political realism means "If you have no teeth, you should not eat meat,"

The writer is a lecturer at the Faculty of Social and Political Sciences, Airlangga University, Surabaya.