RI-Japan partnership to exclusive

RI-Japan partnership to exclusive

Alexander C. Chandra, Jakarta

The Indonesian and Japanese governments have recently
conducted two studies to discuss the feasibility of a Indonesia-
Japan Economic Partnership Agreement (EPA). The first was
conducted in Jakarta from Jan. 31 until Feb 1, while the second
was held in Kuta, Bali, from March 1 to March 5.

Despite increased efforts on Indonesia's side to make the
participation of Indonesian interest groups as wide as possible,
the government invited mostly business associations, a handful of
academics, and a few representatives of civil society
organizations, most of whom were pro-free market, free-trade
actors, to take part in the studies.

In short, both studies failed include other civil-society
organisations with differing views -- they were far too exclusive
and were reserved solely for pro-market actors.

We have learned from the past, that many regional economic
initiatives were made to increase interaction among only large
economic participants, big businesses, or large business
associations from the states involved. From the making of the
ASEAN Free Trade Agreement (AFTA) to the creation of the Asia-
Pacific Economic Co-operation (APEC) group, only big businesses
and pro-market academics were among the non-state representatives
given access to the negotiation processes.

The same situation also applied in the recent studies to
finalise the Indonesia-Japan EPA, where non-state participants
consisted only of those from large business associations, such as
the Indonesian Chamber of Commerce and Industry (KADIN), and
trade liberalisation proponents from academic institutions, such
as the Centre for Strategic and International Studies (CSIS) and
the Institute for Social and Economic Research at the University
of Indonesia (LPEM-UI).

The views expressed by these pro-market and trade
liberalisation believers are of course necessary and while many
of their concepts are arguable, many are also valid. However,
Indonesia's non-governmental organizations encompass not only
liberal economists, but also those who are unwilling to surrender
their land to the hands of foreign governments and multinational
corporations.

As with most studies conducted on regional economic
partnerships and co-operation initiatives in the past, the EPA
studies are likely to produce a recommendation that encourages an
EPA between the two nations to take place, especially in the
absence of those sceptical about trade liberalisation.

There is no doubt that Japan has been one of Indonesia's
closest economic partners and aid-providers for decades.
Indonesia, for example, has benefited from Japan's Official
Development Assistance (ODA) as the largest recipient of aid
during the last few years, while Japan has been a key export
market for Indonesian products.

Although a closer economic partnership will no doubt benefit
both countries, it is imperative that negotiations between the
two sides involve wider domestic representation from Indonesia
and Japan. The Indonesian people were not consulted before; when
the Megawati administration agreed to participate in the
bilateral free trade agreement within the Framework Agreement on
Comprehensive Economic Co-operation between ASEAN and China.

There were two key arguments stressed by neo-liberal
Indonesian economists who took part in the EPA studies. The first
was the likelihood the trade deal would boost Indonesian exports
to Japan. This argument, however, was rather vague considering
that the Japanese market has historically been one of the most
difficult to penetrate by foreigners.

It would only be logical if this economic partnership deal
would lead to a sudden boost of Indonesian exports to the
Japanese market. However, it remains to be seen the extent to
which Indonesian businesses will be able to sell to the Japanese.

The second argument for the EPA was the possibility that this
trade deal could generate domestic reform, particularly on the
Indonesian side. However, there has been little evidence to
suggest that this country's domestic policies were influenced by
the previous free trade deals Indonesia has participated in.

Instead, domestic reforms were more often made possible as a
result of domestic pressures exerted on the government. Would
anyone care to explain why, for example, corruption is still
prevalent in Indonesia despite the economic interference by
international institutions like the World Bank, International
Monetary Fund (IMF), and the World Trade Organisation (WTO)? In
most cases, domestic reforms caused by pressure from
international bodies were only made at the procedural level and
were not necessarily implemented down at the grassroots.

In other words, Indonesia needs to commit to domestic reforms
before committing to any free trade deals.

Another important issue that needs airing as the process
towards the signing of the Indonesia-Japan EPA continues, is the
dissemination of information regarding this economic partnership.

While the issue has involved non-governmental organizations,
the detail of the meetings have not been disseminated among the
general public. It is important that the government should not
make the same mistake it made in the past -- by giving the
authority to make foreign trade policy to elite politicians and
and trade-related government institutions. The public, along
with NGOs, academics and business groups -- both pro- and anti-
free trade -- should be well-informed about the development of
the Indonesia-Japan EPA.

The writer is the research co-ordinator for the Institute for
Global Justice (IGJ). He can be reached at alex@globaljust.org