Conflicting interest behind car row

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.