Indonesia to resume car talks with Japan, EU and U.S.

JAKARTA (JP): Indonesia will continue to seek bilateral solutions to the dispute over its national car policy, but has no intention of offering compensation to any of the parties protesting the policy.

Minister of Industry and Trade Tunky Ariwibowo, said yesterday that until the next meeting of the World Trade Organization's (WTO) Dispute Settlement Body later next month Indonesia would seek new rounds of bilateral talks with Japan, the United States and the European Union.

The WTO's body's next monthly meeting will be in Geneva, Switzerland, on June 25.

"There will be no compensation. What we will have will be negotiations, a give-and-take situation. It must be equal," he said without elaborating.

Tunky refused to give details of how Indonesia would respond to the charges laid by Japan and the EU.

He also refused to explain how Indonesia would prevent Japan and the EU from pushing ahead with their requests for separate panels, without having to offer compensation.

In a meeting of the WTO's Dispute Settlement Body (DSB) on May 23, Indonesia blocked the EU's request to set up a dispute settlement panel to decide whether the national car project breached WTO rules.

In closed-door DSB meetings, a member country has the right to stop a panel being formed the first time it is sought by a complainant.

Indonesia's decision to block the EU's request came weeks after it made the same move in response to a similar request by Japan late in April.

Japan could have formally made a second request this month, but did not do so.

The U.S., the third complainant, has not yet decided to take the dispute to WTO's DSB.

Earlier reports quoted official sources in Tokyo saying that Japan decided to postpone the creation of a panel through a second request because Indonesia was still preoccupied with the general election (tomorrow).

Bilateral talks with Japan are expected to resume early next month.

The 15-member EU is expected to make a second request for a panel at the next meeting on June 25, when Japan could also make a second request.

Indonesia cannot block a second request for a dispute panel to be set up.

If a panel of independent judges is set up it will have nine months to judge the case, and if Indonesia decides to appeal the panel's decision the process will take about six months at the most.

"We shouldn't say (the request for a panel) indicates the failure of our negotiators in Geneva to do their job. We tried our best, but it is the EU's right to take the issue to a panel," Tunky said.

PT Timor Putra Nasional, a joint venture between a company controlled by President Soeharto's youngest son, Hutomo Mandala Putra, and South Korea's Kia Motors, was granted tax and tariff relief to build a national car early last year.

The EU, Japan and the U.S. have said the incentives discriminate against competitors.

EU Ambassador Ron Abbott said last week the car program violated a series of rules regulating international trade -- the General Agreement on Tariffs and Trade (GATT), the Trade-Related Investment Measures (TRIMS) accord and the Agreement on Subsidies and Countervailing Measures.

Indonesia's so-called national car is being imported fully assembled from South Korea's Kia Motors while the joint venture builds its assembly plant in West Java.

Timor Putra is said to have sold less than 1,000 Timor cars a month since its launch in October, though sales have reportedly risen in recent weeks. (pwn)