Can free trade and nationalism coexist?

; This can’t happen until locally-made

products are no longer inferior to imported goods
TODAY
944 words
18 October 2008
TODAY (Singapore)
AM
29
English
(c) 2008. MediaCorp Press Ltd.

THERE have been many countries that have amended their policies by agreeing with
free trade. Due to the perceived negative impact of globalisation, people have now
begun to embrace nationalism.

Free trade is a certainty. For countries that are ready for it, free trade can be
a benefit because their products can reach new markets without stopping at any
borders. But for those that are not ready, free trade can turn into a nightmare.

That’s because products made locally must compete with higher-quality products
from other countries.

The Indonesian Chamber of Commerce and Industry is concerned about this kind of
condition, and that’s why last month, the Indonesian Chamber of Commerce and
Industry tried to bring back nationalism issues, connecting them with the free
trade area.

For the chamber, it’s a very important thing to do so Indonesia can face up to the
recent and future actual challenges. The slogan: “Love Domestic Products” should
have been long ago. Yet that slogan has so far been a lip service only. This issue
is important because even for Asean market, Indonesian products are considered
uncompetitive.

And, Indonesia will also enter the Asean Free Trade Area (Afta) in 2015. So,
nationalism in the context of trade is becoming more important. The goal is to
make Indonesia’s domestic products ubiquitous at home. There are still
controversies related to Indonesia’s deal in the WTO agreement. Many believe
Indonesia is not yet ready to participate.

Others believe that it’s time for Indonesia to participate in free trade precisely
because its products are considered good enough to compete. But the fact is, there
are so many foreign products in the Indonesian market. But because Indonesia has
agreed with the WTO agreement, whether Indonesia likes it or not it must prepare
itself to welcome the free trade area, a price it must pay for embracing an open
economic system.

In order to do that, deputy chairman of Trade and Distribution division at the

Indonesian Chamber of Commerce and Industry, Mr Ketut Suardhana Linggih, said the
consumption of domestic products must become everyone’s concern. “We do not need
to be anti-foreign ... But, we need to prioritise the use of local products,” he
said.

He said nationalism in trade does not violate the agreement with WTO, Afta or the
Indonesia-Japan Economic Partnership Agreement (IJ-EPA). The key to success in
free trade is that Indonesia must consider the conditions for market access, the
support of domestic companies, as well as the government’s support of export
activities.
Policy is the primary requirement for a country’s success in free trade. The
government must protect their national products, then after that, they can play in
the global market. Then, the many obstacles and troubles in the distribution of
national goods and services scream out for bureaucracy reform and port
infrastructure, toll roads, in order to better the distribution of products.

“All related parties such as the Parliament, the government and businessmen must
create a system to ensure that trade transactions in Indonesia can be done
easily,” said Mr Ketut. Apart from supporting the upgrading the IT infrastructure
of national industry, all parties must also endorse the use of national products,
be it in goods or services.

According to him, this kind of nationalism is often used in developed countries.

The United States, which often becomes a reference for the free trade market
actors, had also done the same thing. The head of the post-graduate programme on
American Studies at the University of Indonesia, Mr Roni M Bishry explained that
the US is still nationalistic in that it prioritises its national economic
interests.

“Nationalism in the context of trade ... (is manifested in) taking the side of
national interests; supporting businesses so their exports would increase and
import content would decrease; promoting domestic products overseas; providing
financial and technological support. That’s why nationalism is important at the
moment, as an instrument that can protect national products. Because now we see
that globalisation as a vehicle of free trade does not always have a positive
impact on global society.”

The collapse of the US financial market affecting global markets is one evidence
of the failure of globalisation. Thus, in the past years many countries finally
amended their policies regarding the free trade agreements that they have in order
to find the right formulation to face the free trade itself.

For Indonesia, free trade was considered useful at first, to ensure the growth of
industries and increase exports. It was shown in the title Indonesia had in the
‘90s, as the New Asian Tiger. And even since 1996, Indonesia has shown significant
economic growth.

But the recession hit in 1997 and Indonesia had a weak economical foundation. It
turned out, Indonesia’s economic ability before the crisis was not real. As a
country that had agreed on free trade, Indonesia was trapped in massive foreign
debts. Globalisation had, in the end, made Indonesia depend on international
monetary organisation such as IMF and the World Bank. Indonesia has lost its
independency as a state.

However, according to the Chairman of The Indonesian Chamber of Commerce and

Industry MS Hidayat, free trade is not always scary. On the contrary, it must be
used optimally for our national interest. It means the protection for national
products must be prioritised because generally, the governments of developed
countries — who are in control of the global market — had first protected their
own national products before competing in the global market.