Major powers challenge Indonesia over car policy

Major powers challenge Indonesia over car policy

JAKARTA (JP): Indonesia remained defiant yesterday even though
the world's top three trading powers -- the United States, the
European Union (EU) and Japan -- had taken formal steps to
challenge its national car policy at the World Trade Organization
(WTO).

Minister of Industry and Trade Tunky Ariwibowo told reporters
yesterday that Indonesia would not back down in the face of
major-power pressure.

"Indonesia will not change its car policy. We have a policy
and we will implement it and we will not change it in principle,"
Tunky said after reporting the current developments to President
Soeharto.

The three powers are seeking formal consultations with
Indonesia on the issue in the first stage of the dispute
settlement procedure run by the WTO, whose rules they say Jakarta
is breaking.

Request

The EU delivered its formal request for bilateral talks with
Indonesia to the latter's Geneva mission late Thursday and Japan
followed suit yesterday.

A U.S. envoy said the Washington request would probably be
submitted next week. "We will be throwing the book at them (the
Indonesians)," a U.S. diplomat, who will be closely involved in
the case, was quoted by Reuters as saying in Geneva yesterday.

Under WTO rules, Indonesia has 10 days to respond to the
consultation requests from the three powers and 30 days to start
them. If no accord is reached 30 days after that, the three
powers can ask for the creation of a WTO panel.

The initial panel has to deliver its findings within six
months, but these can be appealed against and the whole process
can take well over a year before the WTO's dispute settlement
body hands down a final ruling.

Tunky said yesterday that Indonesia is ready and prepared to
have consultations with the EU, Japan and quite possibly the
United States over its car policy. He played down the dispute,
saying differences between WTO members are "normal".

"This is normal in international trade practices. As the
volume of international trade is getting larger, more and more
problems will arise. And we cannot avoid it," Tunky told
journalists at his office after receiving copies of Japan's
formal request for consultations under the WTO framework.

At the consultations, Tunky said, Jakarta will be represented
by three ambassadors in Geneva, including its envoy to the WTO,
Halidah Miljani, and an accompanying team of foreign
international trade experts and Indonesian lawyers.

The Indonesian-auto case will be the first of its significance
taken to the 21-month-old WTO by the three big powers against a
developing country, although all the three have been involved in
a similar problem with Brazil.

Ganging up

But officials of the three insist they are not "ganging up" on
a smaller power, although if, as seems certain, the dispute goes
to a WTO panel, they will join forces to present their case.

"One of the advantages of the Uruguay Round agreements (which
led to the creation of the WTO) is that all countries in the
system had obligations and agreed to a system to enforce those
obligations through impartial dispute settlements... So I don't
think this is a matter of ganging up," visiting U.S. Deputy Trade
Representative Jeffrey M. Lang told a press conference here
yesterday.

"We're simply exercising our rights under the dispute
settlement system that all of us have agreed to in the WTO," Lang
added.

Sharing Lang's argument, Yasuhisa Kawamura, economic counselor
at the Japanese Embassy in Jakarta, acknowledged that Japan had
exchanged information with the other two powers on Indonesia's
national car policy but did not advise them to take any action.

"It's up to the EU and the United States to take any action
they consider necessary," Kawamura told journalists here.

Indonesia's national car policy, announced in February, grants
tariff and luxury tax exemptions for three years to PT Timor
Putra Nasional, a company controlled by Soeharto's youngest son
Hutomo Mandala Putra, to develop a national car, known as Timor.

This week, Timor Putra began selling its fully imported Timor
sedans, made by its joint venture partner Kia Motors Corp. of
South Korea but deemed as Indonesia's national cars. Timor Putra
plans to begin assembly of the vehicles next March before
commencing full manufacturing in 1998.

Tunky, however, contended that Indonesia, as a developing
country, has time until the year 2000 to adjust its trade,
industry and economic policies so they comply with the WTO
provisions. (pwn/rid)

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