Govt to lobby Japan, U.S. and EU over Timor car disputes

Govt to lobby Japan, U.S. and EU over Timor car disputes

JAKARTA (JP): Indonesia will dispatch a team to lobby Japan,
the United States and the Europe Union not to dispute its
controversial national car policy.

Minister of Industry and Trade Tunky Ariwibowo said after
meeting Soeharto that Indonesia hoped the world's three biggest
trading powers would not take the car issue to the World Trade
Organization's (WTO) panel of judges.

"We will send a team tomorrow to Japan, the United States and
Europe to discuss Indonesia's national car policy. We hope the
car policy will not be brought to the WTO panel," Tunky said.

The car policy, announced in February last year, grants three-
year duty and tax breaks to PT Timor Putra Nasional to make the
national car, called Timor, in cooperation with South Korea's Kia
Motors Corp..

Since last August, Timor Putra has imported sedans from Kia
Motors pending the completion of its own production facilities
which are expected to be ready in 1998. Timor Putra started
selling its imported cars last October.

Also in October, Japan, the U.S. and the European Union filed
complaints with the WTO about Indonesia's car policy, arguing it
breached international trade agreements.

After filing complaints they had consultations with Indonesia
under the auspice of the WTO.

The next step for them is to drop the case or take it to the
WTO panel of judges but they have not yet decided what they will
do.

Some analysts have said that if they take Indonesia to the WTO
panel, they have a good chance of winning. If so, they will be
entitled to retaliate against Indonesia by imposing barriers to
some of Indonesia's exports.

Mohamad (Bob) Hasan, chief commissioner of local auto
assembler PT Astra Internasional, said the Japanese car industry
was not worried about the national car policy.

"It's just the bureaucracy (which insists on challenging the
car policy at WTO)," Hasan said after talking Toyota Motor Corp.
executives in Tokyo.

Toyota is Astra's partner at PT Toyota Astra Motor, which
makes a range of Toyota vehicles in Indonesia, including the
popular Kijang van.

"I think the Japanese government will understand. Indonesia is
a bigger market than Germany, France and England put together,"
Hasan said.

Japanese vehicles dominate Indonesia's auto market.

"So do they want to have the market or do they want to lose
the market? If they are smart, they will go with us," Hasan said.
(rid)