Tuesday 20 Oct 2020 | 17:22 | SYDNEY
Tuesday 20 Oct 2020 | 17:22 | SYDNEY

Australia, Indonesia and the cows

6 June 2011 09:19

Peter McCawley is a Visiting Fellow at the Indonesia Project, ANU, and former Dean of the Asia Development Bank Institute, Tokyo. He is doing consulting work in Indonesia.

Seen from Jakarta, the row in Australia over meat exports to Indonesia is yet another reminder of just how different the two countries are. The consensus view of Australian public opinion, apparently, is that immediate action is needed to guarantee minimum standards for Australian livestock sent to Indonesia. At the Indonesian end, the issue has hardly registered in the media or across the body politic.

Nevertheless, the row in Australia points up two important problems – the yawning gap which still exists between rich and poor countries, and the damage done to sensible international trade policy by populist export bans.

At the broadest level, the row is a dramatic illustration of  the way rich countries sometimes attempt to set regulatory standards for developing countries. The problem is that poor countries often, quite simply, just do not have the resources to enforce these standards. 

The non-enforcement of the law abounds in virtually every nook and cranny across Indonesia. The roads of Jakarta, for example, are often a free-for-all. Police attempting to control traffic flows are frequently just ignored. A significant proportion of public bus drivers in Jakarta don't have drivers' licenses. A large number of the trucks on the roads are overloaded, often by 50% or more.

There is a multitude of other examples. Lots of people travel on Jakarta trains free of charge by sitting (dangerously) on the roof. And, even at the highest levels, the legal system often doesn't work. Payments to judges to obtain favourable verdicts are commonplace.

This is the environment within which policy-makers in Australia apparently hope that the laws governing the management of Indonesian abattoirs can be enforced. To be realistic, it isn't going to happen. If Australia exerts enough pressure there might be some token efforts made in Indonesia to address the problem. But the truth is that the Indonesian state often lacks the resources to enforce the law.

The broader implications for international trade policy of Australia's decision to impose export bans are just as serious.

All countries, and especially countries such as Australia which espouse free trade, need to think carefully before imposing export bans. There are consequences, not the least of which is the damage done to the key principle of the maintenance of free and open markets. Just last month, because of domestic fuel shortages, China announced bans on the export of diesel fuel. The effect of this decision has been to remind trading partners in Asia that the Chinese Government is willing, at short notice, to withhold supplies of vital products from world markets. 

Many developing countries such as Indonesia are reluctant to embrace the principle of free trade, not least because they believe that even advocates of free trade such as Australia find all sorts of excuses to clamp down on trade flows whenever it suits them. From this point of view, the decision to impose bans on Australian exports of meat to Indonesia causes damage to both Australia and to Indonesia. 

From the Australian point of view, the ban on exports undermines Australia's credibility as an advocate of open international trade. This is especially unfortunate right now because the vital Doha Round of negotiations in the World Trade Organisation is close to collapse.

And at the Indonesian end, the ban plays into the hands of the anti-trade lobby who have been loudly arguing for some time that imports of meat from Australia should be banned in order to provide support for domestic producers. Indeed, anti-trade groups within Indonesia will welcome the ban both because it reduces competition for domestic suppliers of meat and because it backs up their argument that countries that commit to free trade across the international community often break their promises.

Photo by Flickr user Martijn Nijenhuis.