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".