Japan warns RI over Timor car

Japan warns RI over Timor car

CHRISTCHURCH, New Zealand (AFP): Japan warned yesterday that
it may go to the World Trade Organization (WTO) over help given
by the Indonesian government to a car company part-owned by
President Soeharto's youngest son.

The company, PT Timor Putra Nasional, will be allowed to
import components without paying steep duties and luxury goods
taxes if it can meet a local content requirement of 60 percent by
the third year of production.

Some Indonesian newspapers have been reporting for three
months that Timor Putra will be the sole beneficiary of tariff
benefits offered under the program.

The preferential treatment has been criticized by Japan, whose
car-makers account for more than 90 percent of vehicle sales in
the 180 million-strong Indonesian market.

But Jakarta has steadfastly refused to change its policy
despite complaints that it may violate international trade rules.

The arrangement has been the subject of talks here between
Japanese and Indonesian officials attending the two-day Asia
Pacific Economic Cooperation group conference that finished here
yesterday.

Atushi Ohi, director of the automobile division of Japan's
Ministry of International Trade and Industry, told reporters
negotiations were continuing, but Japan could have no choice but
to go to the WTO.

"Japan got a shock when suddenly Indonesia came up with this
scheme," he said through an interpreter. "The policy of the
Indonesian car industry is of great concern.

"Japan has invested a lot of money in the Indonesian
automobile industry. In 1985 when the Europeans and U.S.
investors pulled out of Indonesia Japan stayed and continued to
invest.

"But we want the issue to be out in the open."

General opinion in Japan was that "we should go to the WTO,"
he said.

He said the Japanese government was reluctant to do so because
the national car had been on exhibition, orders had been taken
and first deliveries were due at the end of the month.

"We hope discussions will continue with Indonesia, but we may
have no choice but to go to the WTO."

Indonesia's Industry and Trade Minister Tunky Ariwibowo, who
is here for talks, refused to comment but the minister for
investment, Sanyoto Sastrowardoyo, said in a recent interview
that Indonesia would defend its policy on the grounds of national
sovereignty.

"We want to have our own automobile industry in the real
sense," he said.

Concession

Minister Tunky told Reuters he was unaware of the Japanese
threat, but said he had offered no concessions in separate talks
with American Acting Trade Representative Charlene Barshefsky and
Japanese International Trade Minister Shunpei Tuskahara.

Barshefsky said Washington wanted to resolve the issue through
consultation, but would get tough if it had to.

"We have also told the Indonesians that we will not hesitate
to enforce our rights," she said.

Barshefsky and Tsukahara met late yesterday for an
inconclusive meeting on the stalled microchip talks, ahead of a
July 31 deadline. But she did not expect the issue to be solved
in Christchurch.

"There have been no breakthroughs, but there has been a
significant amount of discussion," she said.

However, a Japanese official told Reuters that Tokyo hoped a
new proposal it tabled yesterday would lay the basis for a speedy
breakthrough.

APEC groups Australia, Brunei, Canada, Chile, China, Hong
Kong, Indonesia, Japan, South Korea, Malaysia, Mexico, New
Zealand, Papua New Guinea, the Philippines, Singapore, Taiwan,
Thailand and the United States.