No breakthrough registered on Indonesia-EU car talks
No breakthrough registered on Indonesia-EU car talks
GENEVA (AFP): The European Union made no headway in talks with Indonesia Thursday over a national car policy dispute and the next step will either be an arbitration panel or more meetings, European trade sources here said.
"We haven't made any progress in talks. Neither side has come up with a proposal to make a settlement," a source close to the talks said.
The private session with Europe follows separate meetings between Indonesia and Japan and the United States this week, where the outcomes were similar.
The trio have complained to the World Trade Organization (WTO) that Indonesia's national car policy breaches international trade rules and they want the controversial measures revoked.
A first series of consultations was held in early November. Under WTO procedures, if the dispute is not settled within 60 days, the three countries have the right to ask for creation of a panel to examine the case.
"Nothing is foreseen for the time being," said the source, adding that the two obvious options now were to request a panel, or continue discussions.
Thursday's talks focussed on legal issues relating to subsidies, trade related investment measures (TRIMS) and local content, the source said.
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, owned by President Soeharto's youngest son, is exempted from paying import duties and luxury taxes. These add about 60 percent to the price of other cars in Indonesia, thus making them less competitive.
The automobiles, which will need to meet a 60-percent local content target, will be produced in Korea under manufacturing facilities are ready at home, scheduled for 1998.
Indonesia claims that as a developing country, its car program has a right to implement subsidies for five years as allowed under an exemption clause of the WTO's Subsidy Agreement.
"We agree with this statement, but we feel that there are other elements in the program which are not consistent with GATT (General Agreement on Tariffs and Trade) rules. The GATT is the precursor to the WTO which started on Jan. 1, 1995.
"There is a clear disagreement on the legal situation," the source said.
He said the results of the round were not surprising. "I don't think we were extremely hopeful about the progress of these talks."