Indonesia, the WTO and globalization

Indonesia, the WTO and globalization

By Huala Adolf

JAKARTA (JP): Monicagate aside, one tough issue now drawing
the attention of the international community is the economic
crisis now gripping most East Asian countries.

The economic crisis has raised a number of issues and is
leading toward a rethinking of the impact of economic
globalization as promoted first by the GATT and now by the WTO
(World Trade Organization).

After bearing witness to the crisis, we should now ask if
globalization is still relevant and if it is worth maintaining?
Conversely, since membership of the WTO and other similar
organizations has proved to be an ineffective means of fighting
the crisis, is it really worthwhile for countries like Indonesia
to maintain a presence in these "clubs"?

The economic crisis, which first hit Thailand then spread to
Indonesia, South Korea and other East Asian countries, has also
affected, to a certain degree, the world's strongest economy, the
United States.

Turbulence in Latin America -- particularly Brazil and
Argentina -- also contributes to the bleak economic picture and
again gives rise to the question as to what degree of
responsibility must be borne by globalization in leading to this
state of affairs.

International institutions such as the World Bank and
particularly the IMF have been blamed for interfering too deeply
in the domestic economic affairs of countries to which they issue
loans. Critics have said that the IMF imposes overly stringent
conditions upon recipient countries in exchange for financial
aid.

Indonesia actually entered into the "prestigious economic
club" in 1950, when it was officially accepted as a member of the
GATT under the sponsorship of the Netherlands. When GATT later
became the WTO, Indonesia was swift to ratify the necessary
domestic legislation, which it passed in 1994.

There was a strong debate in the House of Representative
concerning ratification of the WTO treaty. Those against believed
that by ratifying the treaty, Indonesia was subscribing to
economic liberalization in a form tantamount to an encroachment
on Indonesian sovereignty. It was also said to be out of tune
with Article 33 of 1945 Constitution, which stipulates that the
Indonesian economy must be administered cooperatively and that
important branches of production must be controlled by the State.
Despite the debate, this strong resistance to ratification was
quelled not by a reasonable and acceptable case presented by the
state executive power (then president Soeharto), but because of
the executive's powerful position. Throughout the New Order
administration, executive branch decisions were tantamount to
law. Nobody could challenge its decisions or policies, even the
constitutional representatives of the Indonesian people.

Although there was no clear reason for Indonesia to enter the
GATT or the WTO, it does not follow that the country should now
resign its membership, in fact there is no good reason for
Indonesia to leave the club. Until recently no country in the
world, except perhaps North Korea, has attempted to distance
itself from the international economic community. Most developing
countries, especially those in Latin America, see membership of
these organizations as the best way to come to terms with
globalization.

Furthermore, globalization is irresistible and since many
influential trading nations are members of the club, other
countries have no choice but to play the rules of the game. All
nations, and developing countries in particular must, like it or
not, learn to accept this 'sour' reality.

States that have ratified the WTO treaty have an international
legal obligation to abide by their decision. The act of
ratification binds a state to fully implementing the provisions
of the treaty. It does not mean, of course, that a country is
unable to withdraw its membership, but 6 months notice must first
be given if that is a state's intention.

To withdraw from the club is easy. But to return can prove
difficult. For example, China was once a signatory to the GATT.
However, in 1970 she decided withdrew from the agreement and is
now struggling hard to be accepted into the WTO, as yet without
success due to U.S. objections. The big Uncle contends that China
must first apply the rules and standards of international trade
in its own country before rejoining the club.

The main cause of our economic woes is not globalization. Our
troubles stem from economic mismanagement in most East Asian
countries. A weak financial system and widespread corruption,
collusion and nepotism are believed to have contributed to the
domino-like fall of East Asian countries in the face of the
unfolding monetary crisis. A German research institute once
suggested that Indonesia was among the world's most corrupt
countries. Foreign investors wanting to do business here must, as
a matter of routine, bribe top officials to obtain permits and
get their investment applications processed.

The point that I want to raise here is that there is no room
for Indonesia to blame the present economic woes on globalization
and to withdraw from the world economy as a result. It is evident
that the present economic woes have had a severe impact on most
Indonesian people. A recent report revealed that more than 50
percent of the country's 200 million people are now living in
poverty. Millions of school children have been forced to drop out
of school and thousands of babies are suffering or have died from
malnutrition.

The picture is possibly the darkest yet painted of the country
since independence 53 years ago. But every cloud has a silver
lining and I believe that the current economic difficulties will
become a turning point leading to a New Indonesia and that from
here we will go on to face a global future in a stronger position
than ever before. But this will only happen if the present
government is truly committed to addressing the threefold problem
of corruption, collusion and nepotism.

The writer is a lecturer in law at Pajajaran University,
Bandung.