Japan and RI to solve auto dispute

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)