National car issue has not reached WTO panel: Tunky

JAKARTA (JP): Minister of Industry and Trade Tunky Ariwibowo said that Indonesia's controversial national car policy would not be discussed by the World Trade Organization's (WTO) dispute settlement body which will meet today in Geneva.

Tunky said yesterday that, based on reports from Indonesia's representatives at the WTO's Geneva headquarters, no country had filed a complaint against the national car policy.

The dispute settlement body meets once a month.

Tunky said that countries with complaints to be heard by the panel must submit their agendas several weeks before the meeting.

"But after making a thorough inventory, we discovered that not a single WTO member had referred to the national car policy for discussions (scheduled today)," he said.

But he admitted that this did not necessarily mean that countries would stop taking the case to the WTO.

"We are still holding bilateral talks which means that we still hope the talks will be fruitful," Tunky said.

The United States, Japan and the European Union have threatened to take the issue of Indonesia's national car policy to the WTO, saying the policy breached international trade rules.

Last October, Japan, the U.S. and the EU lodged their first complaints with the WTO, which allows parties 60 days for consultation to try and settle trade disputes.

That period has lapsed but the three have extended their talks with Indonesia.

Under the national car policy, the government granted a series of import duty and luxury tax breaks to a so-called national car maker provided that the cars' local component content was 20 percent by the end of the first year of production, 40 percent by the end of the second year and 60 percent by the end of the third year.

The government granted PT Timor Putra Nasional -- controlled by President Soeharto's youngest son Hutomo Mandala Putra -- the sole right to develop the national car.

The program allowed Timor Putra -- in conjunction with its foreign partner Kia Motors Corp. of South Korea -- to produce Kia's Sephia sedans under the local brand name "Timor".

Since Timor Putra had no assembly plants, the government later allowed it to import 45,000 completely assembled sedans from Kia Motors for its first year of production.

Tunky said yesterday the reason the countries raised complaints at the WTO was because there were "differences among us on how to interpret the clauses of the WTO".

"We say that as a developing country, we should be given some time to line up our regulations for (global free trade) in the next century. And we will abide by this. But some countries say we should abide by this right now," he said.

He denied that the United State's decision to postpone its complaint on the national car policy was compensation for Indonesia's support for the United States-sponsored Information Technology Agreement signed last month.

Under the agreement reached during a conference of WTO ministers in Singapore, several member countries agreed to liberalize trade on information technology products.

Indonesia -- the only developing country that signed the agreement -- committed itself to submitting by March its table of commitments for liberalizing this sector.

Economist Mari Pangestu said the stages in the WTO dispute settlement process consisted of consultation (60 days); establishment of an independent panel, issuance of a report and ruling (six and a half months to one year); adoption of the panel's report (60 days); compliance within a reasonable period or appeal (three months); and compliance (within a reasonable time agreed upon by the disputing parties). (pwn)