Panel for Timor car<\/p>\n
Indonesia's negotiating team is in for a tougher battle now
\nthat the Japanese government has requested the Dispute Settlement
\nBody (DSB) of the Geneva-based World Trade Organization (WTO) to
\nformally commence a dispute settlement mechanism for the Timor
\ncar. That means the body will have to set up a panel of three or
\nfive judges to assess the dispute.<\/p>\n
Indonesia started bilateral negotiations under the WTO last
\nNovember, separately with Japan, the United States and the
\nEuropean Union. These three parties separately filed complaints
\nto the WTO in October over what they see as Indonesia's
\ndiscriminatory trade policy against WTO rules regarding the Timor
\ncar.<\/p>\n
Though Japanese carmakers are obviously the most-affected of
\nthe three complainants, it still came as a big surprise to us --
\ngiven the extent of economic and political relations between the
\ntwo countries -- that the first party to ask for an independent
\npanel was Japan. We are afraid that both the U.S. and EU will
\nfollow soon with a similar request to the DSB. If that is the
\ncase, Indonesia would be facing three separate panels of judges
\nsimultaneously.<\/p>\n
We should magnanimously admit that we have a weak case.
\nDespite the government's persistent claim that its national car
\npolicy does not violate any WTO rules, almost all analysts and
\nindustrialists in Indonesia have considered the policy a breach
\nof several WTO rules. The blunt fact is that tax and duty
\nexemption, designed to accelerate the development of domestic car
\nmanufacturing, has been granted to only one company which
\npreviously had no experience in the automobile industry. Further
\ndamaging Indonesia's position was the government's ruling last
\nFebruary that classifies the Timor sedan as the national car even
\nthough it is fully assembled in South Korean Kia Motors' plant.<\/p>\n
Japan sees the Indonesian national car policy as a blatant
\nviolation of WTO rules, otherwise it would not have risked
\nhurting its excellent relations with Indonesia by asking for the
\npanel. Most diplomats and analysts expected both countries to
\nsolve the dispute, given the great stake involved in their
\neconomic relations. Japan, besides being the single largest
\nprovider of development aid, is also the largest foreign investor
\nin Indonesia. Now that the case will go to a panel, the
\nassessment will be made entirely on the basis of WTO rules. The
\npanel's members will not take into account the perspective of
\nIndonesia-Japan economic ties.<\/p>\n
It is difficult to judge which is responsible for the deadlock
\nin bilateral negotiations, but we get the impression that
\nIndonesia apparently refused to give concessions in fear that the
\nother two complainants would also ask for the same treatment.<\/p>\n
The government, though, should still be commended for its
\ncoolheaded reaction to the Japanese move. Secretary\/State
\nMinister Moerdiono said after he and several other ministers met
\nwith President Soeharto yesterday, Indonesia was disappointed
\nwith the Japanese decision. President Soeharto, he added, had
\nordered the termination of bilateral negotiations with Japan.<\/p>\n
WTO rules require the panel to complete its recommendations
\nwithin six months. Including appeal procedures, the whole process
\nmay take as long as 18 months before a final decision on the
\nTimor car can be made. If the panel rules against Indonesia, the
\nconsequence may be an order for Indonesia to stop the special
\ntreatment given to the Timor car. If Indonesia refuses to
\nimplement the panel's decision, Japan will be entitled to
\ncompensation. And if Indonesia fails to pay the compensation,
\nJapan will be authorized by the WTO to retaliate by raising
\ntariffs on Indonesian products.<\/p>\n
Moerdiono said Indonesia would proceed with its national car
\nprogram despite the Japanese move, meaning that special treatment
\nfor Timor sedans will be implemented according to schedule (for
\nthree years starting last August). There is indeed not much
\nchoice for the government even though Timor cars have not
\nperformed as well as expected and its lower price failed to
\nattract as many buyers, apparently because of the negative image
\ncaused by the controversy.<\/p>\n
After causing such a great international controversy and
\ncosting the government so much money -- in lost revenue from tax
\nand duties forfeited for Timor cars and fees for foreign lawyers
\nand negotiators in Geneva -- and in a damaged image regarding its
\npolicy consistency, the government should see to it that the
\nnational car program achieves its objective- developing a
\ndomestic car manufacturing industry which is competitive
\ninternationally.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/panel-for-timor-car-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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