Japan wants WTO to mediate over car

Japan wants WTO to mediate over car

GENEVA (AFP): Japan on Wednesday officially asked the World Trade Organization to form a panel to arbitrate in a dispute over Indonesia's controversial national car policy, trade sources said here.

Japan, the United States and Europe have held a series of bilateral talks with Indonesia after lodging a complaint with the WTO in October in an attempt to get Jakarta to remove measures which the trio claim are discriminatory and against multilateral trade rules.

However, efforts to reach a settlement have failed, so Japan is requesting WTO arbitration, the Japanese delegate to the meeting was quoted by trade sources as saying.

The request was made at a meeting Wednesday of the WTO Dispute Settlement Body, which handles trade spats.

Indonesia's ambassador Halida Miljani said the government did not support the panel, and was convinced its car program was consistent with WTO regulations, the sources said.

Under WTO rules, a panel must be automatically convened on a second request from a contesting party.

The core of the trio's complaint centers on Indonesia's discrimination under the WTO's national treatment rules, which hold that no special favors may be doled out to any particular trading nation.

Indonesia's "national" car is currently being imported from South Korea by a joint venture between Kia Motors and PT Timor Putra Nasional.

Timor Putra, granted sole car supplier rights, is exempted from paying import duties and luxury taxes, which add about 60 percent to the price of other cars in Indonesia. The company is run by President Soeharto's youngest son, Hutomo Mandala Putra.

Indonesia had hoped to avoid the formation of a panel, which would examine the dispute and issue a final report within about six months.

Under DSB procedures, creation of a panel will be automatic at the next meeting on May 23 if Japan pursues the complaint.

A panel ruling could be expected by the end of the year, although this could be appealed by either side.

Trade sources said a Japanese official told the DSB on Wednesday that Tokyo understood Indonesia's desire to build its own automobile industry, but argued this could only be done in conformity with Jakarta's obligations under WTO accords.