The Tokyo Mission

Reviewed by Hitoshi URABE

Article:
The Tokyo Mission
Jakarta Post
http://www.thejakartapost.com/
yesterdaydetail.asp?fileid=20061129.E01

Comments:

The article introduced is a very well written article on the relationship between Japan and Indonesia, at the occasion of their President Susilo Bambang Yudhoyono visiting Japan to meet Japan's Prime Minister Shinzo Abe. The article explains how the EPA (Economic Partnership Agreement) between the two countries have come about, its status in the light of the concerns of the peoples of the two countries.

EPA is a form of an FTA (Free Trade Agreement). The term is often preferred to be used to emphasize that the agreement covers the areas beyond trade. Such areas include liberalization of investment rules, standardization and harmonization of safety standards, and other regulatory - sometimes considered traditionally domestic - issues.

Proponents of the EPAs (and FTAs) claim that the smaller the restrictions and barriers are for the trade the better. While the theory to back up this assertion is simple and easy to understand, implementation of it has not been found to be easy, as vividly recognized in the case of WTO negotiations. At WTO, after a large part of the concept has been implemented - and the benefit enjoyed around the globe, the thrust to push forward waned and the negotiation bogged down. There are apparently aspects of livelihood and cultures people feel would not benefit by being exposed to the "market" defined in monetary values. People consider maintaining such aspects important well aware of the cost and burden involoved.

This recognition - and perhaps because of the slow progress at WTO - has led the countries to opt for bilateral and small group agreements in lieu of the grandeur of WTO. It is not that the elements that dragged the WTO negotiations could be totally avoided in bilateral talks, but the issues themselves would be smaller, both in number and magnitude, and more important, they can be circumvented by the parties agreeing to do so.

Arguably, Indonesia is important for Japan most directly in its role for sustaining Japan's energy supply. As mentioned in the article, Indonesia supplies a quarter of Japan's LNG needs. Moreover, 90% of Japan's oil imports pass through the Malacca Straits, the channel between the Malay Peninsula and the island of Sumatra. Accordingly, the safe passage of the strait is crucial for Japan's survival.

Indonesia is a core member of ASEAN, where Japan is located at its fringe in geographic terms, and with which already maintains a reasonable economic relationship. But there are more Japan can do to share the wealth for the welfare of the people in the region, including the Japanese themselves. Direct investments are always important, but also measures such as enhancing local produce exports to Japan for the benefit of Japanese consumers, and accepting workers already lacking in Japan should be pursued.

For quite a number of the Japanese people, Indonesia is a place where a thousand or so then Imperial soldiers remained after losing WWII, to join the local people fighting for independence against the Dutch who re-occupied the land. A small piece of history, but many Japanese have affinity to Indonesia because of this, if only sentimentally.

Critics point to the ambiguities in the proposed EPA. Indeed, many people would want more security on energy supplies, both in terms of Indonesia's LNG export and measures to enhance safety of the Malacca Straits, in exchange for - or rather welcome in their own right - further import liberalization for Indonesian farm produce, as well as accepting trained nursed and caretakers to serve in Japan's aging society.