Sensitivity Interdependence in Global Production System: Australia’s 2011 Live Cattle Export Ban
International Relations Masters student at Universitas Gadjah Mada
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The Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA) positioned Indonesia as Australia’s biggest live cattle market, worth AUD $600 million of bilateral trade under the framework’s $18.35 billion in 2022, reflecting the growth of Australia’s Northern Territory cattle industry. Despite such accumulation, bilateral live cattle trade between these countries has experienced significant hiccups before the COVID-19 pandemic, primarily with the abrupt suspension of live cattle exports in June 2011, beginning a 9-year spiral of trade renegotiations and unequal dependence on cattle exports before the Federal Court of Australia ruled the 2011 live cattle ban order as “capricious” and "unreasonable" in 2020. Following the broadcast footage exposing the inhumane treatment and slaughter of cattle in Indonesian abattoirs, the ban would further distort agricultural trade for both countries, as Indonesia's reliance on the 30% of beef demand imports from Australia became an issue of declining quality, and Northern Australia’s wider agricultural industry was prominently impacted, affecting the well-being of rural populations working in the country’s regional economy; accounting for 48% out of 58% of land use in territories for agriculture.
After the official suspension signed by Senator Joe Ludwig on 7th June 2011, the agriculture minister at the time, Australia's economic state resulted from the sudden change in the transfer of livestock from the international market to the domestic market, in parallel with Indonesia’s decision concerning subsequent import quotas and tightening weight restrictions after the ban. The complex legislative framework for the live export trade failed to define the roles and responsibilities of relevant parties in the export trade (Blanchett, 2012), as the Northern Territory-based Brett Cattle Co.'s claim for action against the Australian government became a prime example of the lack of compliance and the self-insufficiency in accounting for Indonesia and/or the Northern Territory Cattlemen’s Association as subjects of trade security and destined markets. The immediate bilateral shock between Australia and Indonesia, as reflected in many cases of North-South Cooperation (NSC), is a product of asymmetry.
A Political Economy of Complex Interdependence
Robert Keohane and Joseph Nye departed from the absence of issue hierarchy, where interdependence is bound within and out of interstate relations. The clear dividing line between domestic and any priorities of foreign policy agendas may be at the top of the international agenda at any particular time, as elements of economic transnationalism derived from political economy negate the arrange of hierarchy among issues (Rana, 2015). As two dimensions of interdependence collide, sensitivity and vulnerability, to which the former acts on the basis of significant political influence and the adaptability of how a country changes under the degree of responsiveness within a policy framework. Sensitivity interdependence can be taken for granted by a stronger actor in certain cases, with an extreme cost for dissatisfied actors to change their policies immediately (Keohane & Nye, 1997). The latter focuses on the actor’s liability imposed by changes after the reconfiguration of policies, as it is a rebuttal to incur lower costs from actions done by actors. In an asymmetrical interdependence, costliness and its adjustment factor in how weaker states are inherently vulnerable to changes made post-policy changes (Rana, 2015). The political economy behind the 2011 live cattle export ban, along with the withdrawal of its suspension for "misfeasance in public office," asserts that asymmetry ties behind global development practices, particularly in the context of NSC.
The export ban led to a hiccup in the global accumulation and redistribution of cattle and beef supply chains, with the price decline of cattle fed with grass by 4% and a decrease in the price of fed grain livestock by 1% (Firmansyah, n.d.). This condition certainly burdens production through breeders and cow-calf operations in both Indonesia and Australia, who have to continuously provide food for their cattle without knowing the market and access to exports. As the live cattle export ban persists, the local actors aforementioned were unable to transfer produce to one of their reliable markets, as there is simply the issue of noncompliance, consequently disabling the absorption of the number of cattle prepared from Indonesia, along with the distinctness of the regulation on the import of each country. Despite the growing relationship with India in 2016 as an exception to Indonesia’s alternative cattle partner at the time, the condition certainly harmed Australian breeders even more due to the loss of Indonesia as one of Australia’s lucrative segments of the cattle market, paired with the gradual rise of Australian beef exports in 2024.
Desai (2024) supported this argument by observing the decrease in national trade impacts, particularly in Northern Australia, where export activities from 2013 to 2017 and its reliance on four major export destinations, including the United States, Japan, China, and South Korea, would create a disproportionate impact on Australia’s agricultural industry. Moreover, the ban resulted in the fall of the percentage of live cattle exports from 521,002 to 278,581 in 2012; following the fall in live cattle exports, the steep decline in meat prices in the domestic market, which dropped from $2.10 per kg to $1.60 per kg, affected the pricing and redistribution efforts of beef exports, with revenue of approximately $160 per head for a 320 kg animal. Over 75% of properties notably owned by cattle operations in Northern Australia are reported to be partially or completely reliant on live cattle receipts (Sinclair et al., 2018).
With the withdrawal of the ban order in 2020, the vulnerability of producers in the context of Indonesia and Australia, and cattle operations in both countries, experienced asymmetric bilateral trade dynamics. 30% of Indonesia’s cattle exports from Australia interacted in parallel with the supply interruption and price fluctuation, with the push of domestic production that can’t seem to maximize without Australian feeder cattle at scale. The falling prices that Australia experienced meant that no other market (other than Indonesia) could absorb the cattle after the ban order, where the misfeasance became an actual legal liability for the state.
The figure demonstrates the position of Australia in the adoption of animal welfare assessment and surveillance, with the cattle export ban in effect, sheep export and farming families in the region. These encouraging signposts of extensive animal welfare in the country provided lessons for global considerations for Australia’s food security system (Windsor, 2021).
Keohane and Nye (1973) would also emphasize how sensitivity interdependence can be social or political as well as economic. Transnational communication and/or diplomatic relations contribute to sensitivity in the product of policy or political action, as reflected by the jeopardy of Indonesia and Australia from the ban. Broadcasting programs in Australia have alleviated the particular issue, along with the extraordinary public response of anger and demands from animal protection organizations (Animals Australia, The Royal Society for the Prevention of Cruelty to Animals) calling for immediate prohibition on the export of live cattle to Indonesia. Following the news, the then-Australian agriculture minister, Senator Joe Ludwig, signed a six-month suspension of the live cattle trade to Indonesia. Conversely, Indonesia’s measures for animal slaughtering, such as the fatwa MUI, determine and ensure that every process of animal slaughtering fulfills requirements under precautions where animals cannot be tortured before the slaughtering process.
The Indonesian Ministry of Agriculture at the time, Suswono, expressed objections through diplomatic channels that the decision that had been taken was too soon to be concluded, as there was no investigation that had been done prior to the signature of the order. Although both countries persisted through their NSC under the Working Group on Agriculture, Food, and Forestry Cooperation (WGAFCC) Indonesia-Australia agenda, the repercussions of the ban led to a lawsuit from the Northern Territory's Brett Cattle Co., which amounted to a loss of about $2.5 million in profits due to the ban, followed by 30 parties joining this action, demanding up to $600 million in compensation. Trade constraints often signal a lack of ideas or an attempt to constrain market forces that are driven by the more vocal or influential rather than the majority or evidence-based policy analysis (Trewin, 2014). These trade constraints, as presented in the case of Australia and Indonesia, are the result of sensitive domestic non-trade issues, like self-sufficiency in the case of Indonesia or animal welfare in the case of Australia, dominating trade policy, a situation that was criticized in the Productivity Commission.
As it turns out, the 18-month period before the Australian federal court ruled the ban order invalid did contest how a global production system knows no hierarchy of issues in political economy, precisely on the cycle of the global production system and food security.