Car policy talks to go on outside WTO, says Tunky

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo plans to discuss further Indonesia's controversial car policy with his counterparts from Japan, the United States and the European Union (EU) on the sidelines of the World Trade Organization (WTO) meeting.

He said more discussion was needed at the meeting in Singapore next week to solve the dispute.

The minister said Indonesia might enter a third round of talks with Japan, while bilateral talks with the United States and Europe were continuing.

The government would rather propose another round of talks than leave the dispute to the WTO arbitration panel, he said, commenting on Japan's and Indonesia's failure to resolve the dispute in Geneva recently.

If ongoing bilateral talks with the U.S. and EU also failed, the government might pursue a similar approach, he said.

Tunky said discussions on Indonesia's national car policy would not be on the WTO agenda in Singapore.

"Of course, we shall hold talks outside the official forum at the WTO meeting. We will probably find an ideal solution to the problem," he said.

Japan, the U.S. and EU are protesting the national car policy which they say breaches international trade rules.

The policy gives PT Timor Putra Nasional, owned by President Soeharto's son Hutomo Mandala Putra, the sole right to develop national cars. The firm does not have to pay duties to import its sedans from its partner Kia Motors of South Korea, before it opens its own plants.

Japan, the U.S. and EU filed complaints with the WTO in October, demanding that Indonesia revoke its policy. There is a 60-day consultation period with Indonesia before they can request that an arbitration panel examine the case.

Japan and Indonesia have just completed their second round of talks to no avail, while talks with the U.S and EU are expected to end this week.

After the failed second round of talks, a Japanese official said his country was waiting for Indonesia's talks with the U.S. and EU to end before deciding whether to ask an arbitration panel to examine the case.

"No decision has yet been made, but we are not eliminating the possibility of a panel," the official told AFP.

Tunky said yesterday he was waiting for talks with the U.S and EU to end before consulting with other ministers and President Soeharto on further action.

He expected he would discuss the issue with the President soon after the second-round talks ended.

Timor Putra is exempted from import duties on luxury cars and their components, which add 60 percent to the price of other cars in Indonesia. The firm has imported 10,500 sedans from Kia Motors which carry the Timor brand.

The company is allowed to import the sedans duty free until it opens its plants in 1998. The government demands that after the company has produced cars for three years it must produce them with 60 percent local content. (jsk)