How Indonesia Should Respond to U.S. Economic Saber Rattling

Recently, the US has begun pursuing a number of threatening trade initiatives meant to end what it calls the "unfair trading practices" of other nations. Indonesia, one of the 55 nations named, is accused of hurting the US economy with excessive trade barriers. According to Jakarta-based business consultant Patrick Guntensperger, the accusations are groundless. To counteract any attempt by the US to "bully" Indonesia, the state needs to develop a comprehensive strategy to maintain and expand trade links. An "Indonesian strategy must be to make her products so indispensable to the U.S. that no administration could summon the political will to tax them out of reach of the citizens", claims Guntensperger. All nations need to deal with the reality of the US as a vital, but politically unpredictable, trading partner. Working to make national products important to US consumers may become a necessary part of trade strategy. – YaleGlobal

How Indonesia Should Respond to U.S. Economic Saber Rattling

Patrick Guntensperger
Friday, April 9, 2004

It was recently reported that the United States has taken Indonesia to task for what it claims are unfair trade practices. The report, which lists Indonesia among 55 nations that allegedly impose unfair trade barriers, accuses Indonesia of having badly hurt the United States economy.

Of course after we have all finished wiping away our tears pity for the poor suffering citizens of the U.S. and have acknowledged our collective guilt for such economic bullying of the world's most powerful and wealthiest nation, we might want to ask ourselves just what the U.S. wants from Third World countries. Once the question is posed, the answer becomes self-evident. What does the U.S. want? Everything.

The United States in its dealings with smaller, less powerful nations is congenitally incapable of recognizing their autonomy, their rights, their individuality or even the most basic principles of justice or fair play. And in the current geopolitical situation that list of smaller, less powerful nations includes every country in the world.

In its international trade posturing, as in most things, the United States is sanctimoniously hypocritical. Can one really take seriously the suggestion that an Indonesian refusal to import substandard chicken parts is threatening the livelihood of U.S. farmers?

While the whining that Indonesia is mistreating the U.S. in its trade practices is obviously fatuous, this dispute underlines one of the challenges that face a country like Indonesia at this critical juncture in her progress to full maturity as a player in the game of geopolitics and global economics.

How does one deal with a trading partner that is vastly more powerful, enormously wealthy, always sees itself as the victim and is utterly ruthless, both economically and militarily? Unfortunately the option of just not dealing with the U.S. is not realistic. The sad reality of the early 21st century is that we all have to deal with the bully in the neighborhood.

The U.S. has a long history of unfair trade practices. For a single, recent example, ask any of the thousands of mill workers in British Columbia, Canada who were thrown out of work when a protectionist tariff was slapped on Canadian timber products.

All of the rhetoric and doubletalk aside, everyone knows that the tariff was an appeasement to a few U.S. mill owners (Republican supporters) whose inferior lumber couldn't compete on a level playing field. That's how the U.S. deals with its "closest ally" and "friendliest neighbor" and "greatest trading partner" and first signatory to NAFTA (North American Free Trade Agreement). Should a country like Indonesia expect any better treatment?

Every producing country needs access to the enormous U.S. market, the world's largest importer of consumer goods. Indonesia, in order to compete on a global level, must have broad access to those insatiable consumers. However, that will only happen on their terms. And those terms will be favorable to the U.S. or there won't be any terms at all. The U.S.'s practice is to concoct some accusation of protectionism (a sport for which the U.S. holds the title) and shut the trade doors, choking the weaker nation into submission, then reopening them on their own terms.

Just the same, the U.S. is running a staggering trade deficit. The country is buying products from foreign countries at an unprecedented rate and exporting less and less every year; this suggests that the unwritten policy of economic extortion is likely to kick into overdrive soon. Now is the time for a forward thinking Indonesian government to consider strategies for dealing with the upcoming shoving match. Those strategies will determine whether Indonesia has what it takes to make it in the big leagues.

Threaten a trade embargo? That would be to shoot our self in the foot. There is nothing the economic mandarins in the U.S. would like more than to have inexpensive, good quality, foreign products withdrawn from the shelves of U.S. shops. The more they can redress their balance of trade the happier they'd be. An Indonesian strategy must be to make her products so indispensable to the U.S. that no administration could summon the political will to tax them out of reach of the citizens. A major initiative to develop a popular market in the West for Indonesian products would accomplish that.

Every few years, the U.S. public develops a crush on a foreign culture. At different times in the 20th century, the French, the Mexicans, the Australians and the Japanese have benefited enormously from a popular fascination with their countries. Indonesia could conceivably ride a similar wave of popularity. Raise the Western consciousness about things Indonesian and the economic benefits will be uncountable.

A focus on foreign trade, encouraging tourism (rethink the new visa on arrival policy, but that's another article) and a dedication to supporting companies that produce uniquely Indonesian consumer goods for the export market are concepts that we should look for in a new government's platform.

Patrick Guntensperger is a business consultant in Jakarta.

© The Jakarta Post