Japan and RI to solve auto dispute

JAKARTA (JP): A two-day meeting between Indonesia and Japan over the former's new national car policy ended inconclusively here yesterday, but both countries' delegations agreed to try and reach a bilateral solution before involving the World Trade Organization (WTO).

Indonesian Minister of Industry and Trade Tunky Ariwibowo acknowledged that senior officials from the two countries did not reach any agreements on the controversial car policy yesterday but agreed to continue discussions later this month in Tokyo.

"We are still trying to find a solution to our differences," Tunky said after the conclusion of the two-day meeting of senior officials from both countries.

Tunky, however, denied that the meeting ended in deadlock, arguing that if there had been an impasse, talks would not be continuing in Tokyo.

The Japanese side, however, was not committed to any particular date, but agreed to continue the talks in Tokyo in the near future.

Tunky refused to disclose the substance of the two-day meeting, arguing that if he did so it could create speculation about the talks.

He only said that in the meeting, the Indonesian side explained the background and the objectives of the new automotive policy and stressed that Indonesia had studied the WTO's provisions before announcing the new policy.

The Indonesian government announced last February that it would grant tariff and tax breaks for three years to PT Timor Putra Nasional, a company controlled by President Soeharto's youngest son Hutomo Mandala Putra, to develop a national car.

The company plans to team up with Kia Motors Corp. of South Korea to assemble 1,500 cc sedans under the Indonesian brand name Timor.

The new policy sparked protests from the Japanese government and car makers, contending that several points of the new policy breach WTO regulations.

Too early

The director general of economic cooperation at the Japanese Ministry of International Trade and Industry, Hidehiro Konno, who led the Japanese delegation at the meeting, said yesterday that it was too early to say whether Japan would take the dispute to the WTO, adding that negotiations were ongoing.

"WTO rules are most important for us. However, I can't say at the moment whether we will go or not go (to the WTO panel). We, in good faith, will try to resolve the issue bilaterally," Konno said.

Agreeing with Konno's suggestion, Tunky said Indonesia would rather seek a bilateral solution to the controversial car policy than bringing the issue to the WTO.

He said Indonesia wants to avoid damaging its economic relations with Japan through a "small issue" of its automotive policy.

"This sector (the automotive sector) is only a small part of our broad-based economic relations. And we don't want this small issue of automotive policy to jeopardize our economic relations." Tunky said.

Both Tunky and Konno described the atmosphere of the two-day meeting as very friendly and candid. "We talked as friends," Konno remarked.

Konno said at the meeting he had the told Indonesian delegation that the new policy seems to be inconsistent with the spirit of the Bogor declaration -- adopted by leaders of the Asia Pacific Economic Cooperation forum in their second summit in Bogor, south of here, in 1994 -- in terms of transparency and non-discrimination principles.

As the national car policy may flout international trade agreements such as the WTO, Konno warned that it could threaten the confidence of potential investors over Indonesia's business climate.

"We are concerned that this policy could discourage foreign automotive companies from investing in Indonesia," Konno said.

He added that Japan was also concerned that Indonesia's new car policy would set a regional trend.

"If Indonesia, as a good leader country, takes a measure which is inconsistent with the WTO, other countries may follow suit," Konno said. (rid)