Pressure builds on RI's auto policy<\/p>\n
By Russell Williamson<\/p>\n
THE pressure to reform Indonesia's controversial automotive
\npolicy continues to build, with the European Commission vice
\npresident, Leon Brittan, urging President Soeharto to bring the
\npolicy into line with World Trade Organization (WTO) rules.<\/p>\n
According to a report from AFP, Leon said he had personally
\ntold the President that Europe did not believe the policy --
\nwhich favors PT Timor Putra Nasional with substantial tax
\nconcessions -- was in line with the WTO trade agreement.<\/p>\n
PT Timor -- which is headed by President Soeharto's youngest
\nson, Hutomo Mandala Putra -- has been given permission to import
\ncompletely-built-up and completely-knocked-down vehicles from its
\npartner, Kia Motors of South Korea, free of all import tax.<\/p>\n
Speaking at a World Economic Forum in Hong Kong last week,
\nLeon said: \"We very much hope that a resolution of the matter can
\nbe found, whereby Indonesia brings itself into line with that
\nagreement.\"<\/p>\n
The call by Leon follows complaints from Europe, Japan and the
\nUnited States which were lodged with the WTO last month.<\/p>\n
However, Indonesia's Minister of Trade and Industry Tunky
\nAriwibowo told the same conference that there were provisions
\nwithin the WTO rules to have time \"to adjust part of our economic
\npolicy to catch up with the developed world.\"<\/p>\n
But while complaints and accusations of unfairness surround
\nthe policy both on the international and domestic front, the
\nquestion remains as to whether the WTO can have any real effect
\nin changing Indonesia's automotive policy.<\/p>\n
According to a spokesman from the WTO secretariat, Indonesia
\nis legally bound by the decisions of the WTO and the
\norganization's dispute settlement body (DSB).<\/p>\n
Under the rules and procedures governing the settlement of
\ndisputes, the DSB \"has the sole authority to establish panels,
\nadopt panel and appellate reports, maintain surveillance of
\nimplementation of rulings and recommendations, and authorize
\nretaliatory measures in cases of nonimplementation of
\nrecommendations.\"<\/p>\n
\"If the losing country does not change its illegal measure or
\nnegotiate compensation, then the winning country can request the
\nDSB for retaliatory measures,\" the spokesman said.<\/p>\n
\"It will assess how much trade damage the winning country is
\nsuffering as a result of that illegal measure and suspend an
\nequal amount worth of concessions which it had negotiated,\" he
\nsaid.<\/p>\n
However, the spokesman said the strict procedures which needed
\nto be followed could mean that any resolution to a dispute could
\ntake up to 18 months.<\/p>\n
While the most desirable outcome for the complainants in the
\nTimor-car case would be a reversal of the current policy, or
\napplying the rules equally among all the carmakers, in Indonesia,
\nthis may be cause for concern on a political front.<\/p>\n
In order to \"save face\", the spokesman said there were other
\nmeasures which could be ordered to reduce the political
\nimplications of any WTO ruling.<\/p>\n
\"Sometimes you may get a case where it goes through all the
\nprocesses, the panel and perhaps even the appeal body upholds the
\npanel report, but the guilty country, perhaps for political
\nreasons, can't change that illegal measure,\" he said.<\/p>\n
\"So, what they do then is the guilty country will negotiate
\nfor compensation,\" the spokesman said.<\/p>\n
With Indonesia a full member of the WTO and subsequently bound
\nby the agreements which came out of the Uruguay Round of trade
\ntalks in 1993 and 1994, it can only be a matter of time before
\nthe automotive policy is amended.<\/p>\n
The hope is that that amendment will be one which allows all
\ncar companies to operate on an even playing field, which would
\nstimulate the automotive industry back into action and ultimately
\nprovide consumers with a wider range of cheaper cars.<\/p>",
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