A year full of bilateral engagements. This is a simple phrase to reflect the agenda of President Joko “Jokowi” Widodo at the end of 2016 and the beginning of 2017.
The President closed his 2016 foreign policy agenda by visiting Iran and India and opened his 2017 international moves by visiting Australia before hosting a historic and entertaining visit by King Salman bin Abdulaziz Al Saud of Saudi Arabia a couple of weeks ago. French President Francois Hollande also visited Jakarta — the first visit by a French president in more than 30 years. This is a prime time for bilateralism.
The President’s decision to engage in bilateral engagements somehow anticipated recent political developments in several key states that will likely lead to more bilateral arrangements rather than multilateral ones.
The decision of the United Kingdom to exit the European Union and the decision of the new United States President, Donald Trump, to keep out of the TransPacific Partnership process imply that multilateral arrangements are no longer the preferred options for the key states.
Just recently, the G20 Finance Ministers’ Meeting in Germany failed to secure a free trade commitment, which is usually highlighted by the multilateral forum, following the US’ opposition.
In the past, many perceived bilateral arrangements as ineffective ways to achieve economic cooperation because they take more time, are costly and involve the complex interests of different states. No wonder that many governments have moved toward multilateral arrangements, perceived to be more effective for dealing with various interests of economic cooperation.
For emerging economies like Indonesia’s, the return of bilateralism can pose a challenge if they are not ready to deal with powerhouses through one-on-one processes. An imbalanced negotiation capacity combined with asymmetric data and information could limit the bargaining positions of emerging economies versus major powers.
Therefore, we must anticipate the return of bilateral arrangement for economic relations as multilateral arrangements are viewed by the new leaderships in key states as unfavorable ways.
For Indonesia, the return of bilateralism implies three things.
First, Indonesia has to create bilateral arrangements that are effective, comparatively less costly and strategically beneficial.
The government can first utilize procedures in multilateral arrangements as a template for bilateral cooperation.
For instance, in the case of Indonesia’s future relations with the UK, both governments can use a similar pattern to that of the Indonesia-EU Comprehensive Economic Partnership Agreement to renegotiate trade relations. This will help both governments to expedite negotiations without putting too much effort into finding a new common platform for bilateral negotiations.
Second, the government should provide guidance for bilateral economic cooperation on directions, targets, strategies and, most importantly, Indonesia’s interests. Due to its growing economy, Indonesia’s roles and position in international fora are changing. Therefore, our policy in bilateral economic cooperation should be planned and managed with more advanced approaches.
Currently, the grand design of economic cooperation remains vague in relation to our current bilateral policy. Several elements of bilateral cooperation need to be reviewed including goals, strategies and action plans. Overall, the new guidance will shed light on future bilateral cooperation.
Third, as bilateral economic cooperation deals with a wide range of issues, interests, actors and authorities, better policy coordination is needed. Policy coordination should reflect national collaborative action among authorities and non-state actors. Policy coordination between state and non-state actors has become more crucial, as it may expose the private sector to external shocks.
Obviously, a new configuration of public-private collaboration is essential for bilateral cooperation. The configuration should entail the participation of non-state actors, including market players, business associations, or even small and medium entrepreneurs. In this regard, the non-states actors are expected to play significant roles in assisting policymakers to develop a better stance or policy for bilateral cooperation. And authorities should start to listen to the private sector and understand its interests and expectations.
The growing trend of non-state actor participation in bilateralism does not mean we can ignore the state’s role in future bilateral cooperation. While participation of non-state actors in the development of bilateral cooperation is growing, the roles of state regulatory agencies remain significant.
These three issues should be timely and properly addressed if we want to enhance our capacity in bilateral economic cooperation. We learn from the advanced countries that their strengths in dictating economic cooperation comes from their ability to shape a clear direction for economic agendas, supported by the public sector’s trust and guided by strong leadership. Hopefully we can have all these elements soon.