Japan delays WTO probe into RI's national car policy

Japan delays WTO probe into RI's national car policy

By Russell Williamson

JAPAN has offered the Indonesian government a small reprieve
in its efforts to bring the "national car" controversy before a
WTO panel for judgment.

According to the Japanese wire service Kyodo, Japanese
officials have postponed a request to the World Trade
Organization (WTO) to establish a three-member panel to rule on
Indonesia's national car policy until at least June.

Japan, the United States and the European Union filed a
complaint with the WTO last October claiming that Indonesia's
national car policy was discriminatory.

At the center of the controversy is PT Timor Putra Nasional,
which is headed by President Suharto's youngest son Hutomo
Mandala Putra.

Timor Putra is the sole recipient of tax concessions that
allow it to import duty free 45,000 cars and completely knocked
down car kits for three years from its South Korean partner Kia.

At a meeting of the WTO's Dispute Settlement Board (DSB), to
be held on May 23, Japan was to request for the second time the
formation of a panel.

However it has now decided to postpone this request until at
least after the general election.

"We would like to give more time to Indonesia to think it
over," an official said.

Japan first requested the setting up of a panel at a DSB
meeting on April 30 after talks between the two countries failed
to reach an agreement.

The panel was not established after the first Japanese request
because Indonesia rejected it.

However, under WTO rules, Japan could lodge a second request
which would automatically be granted and a panel would then be
formed.

According to a spokesman from the WTO secretariat, Indonesia
is legally bound by the decisions of the WTO and the
organization's DSB panel.

Under the rules and procedures governing the settlement of
disputes, the DSB "has the sole authority to establish panels,
adopt panel and appellate reports, maintain surveillance of
implementation of rulings and recommendations, and authorize
retaliatory measures in cases of nonimplementation of
recommendations."

"If the losing country does not either change its illegal
measure or negotiate compensation, then the winning country can
request the DSB for retaliatory measures," the spokesman said.

"It will assess how much trade damage the winning country is
suffering as a result of that illegal measure and suspend an
equal amount worth of concessions which it had negotiated," he
said.

However, the spokesman said the strict procedures which needed
to be followed, could mean that any resolution to a dispute could
take up to 18 months.

The Japanese official said there was no decision yet on
whether a second request would be made at the June DSB meeting
and Japan was still open to further bilateral talks "if Indonesia
so wishes".