RI blocks EU bid for WTO panel on national car

RI blocks EU bid for WTO panel on national car

GENEVA (Reuter): Indonesia blocked yesterday a request by the
European Union to set up a dispute settlement panel to look into
whether Jakarta's "national car" project breaks World Trade
Organization (WTO) rules, trade envoys said.

EU officials made the move at a closed-door meeting of the
WTO's Dispute Settlement Body, where a country has the right to
hold up the creation of a panel the first time it is sought.

Trade diplomats expect the 15-member EU to bring its complaint
against Jakarta to the next WTO meeting set for June 25, when
Japan could also formally make a second request.

Indonesia could not block a second request for a disputes
panel to be set up, although a panel investigation into the
complaint that could last into next year.

Indonesia's Halida Miljani told the meeting that Jakarta could
not support establishment of a WTO dispute panel at this session
and was discussing the possibility of a settlement with its
partners, according to trade envoys.

Timor Putra Nasional, a joint venture controlled by President
Soeharto's youngest son, Hutomo Mandala Putra, and South Korea's
Kia Motors , was granted tax and tariff breaks to build a
national car early last year. The EU, Japan and the United States
say the incentives discriminate against competitors.

EU Ambassador Ron Abbott said the car program violated a
series of rules regulating international trade -- the General
Agreement on Tariffs and Trade (GATT), the Trade-Related
Investment Measures (TRIMS) accord and the Agreement on Subsidies
and Countervailing Measures.

Indonesian measures included granting relief on import-duty
for parts and components used to assemble motor vehicles in
Indonesia, and local content requirements. They also gave
exemption from luxury tax for certain categories of motor
vehicles assembled in Indonesia and in certain third countries,
he added.

The EU held bilateral consultations with Indonesia in November
and December, but failed to reach agreement.

Japan's trade ambassador Nobutosi Akao supported the EU's
request. He originally sought a WTO panel on April 30 and would
renew the request if no proposal was forthcoming from Indonesia,
he said.

Tokyo held off from putting in a second request for a panel
yesterday to allow time for consultations to take place, the
sources said.

An official was quoted in Tokyo as saying yesterday that
Japan was postponing a request for a WTO panel on the national
car program until after Indonesia's May 29 elections.

But Japan is not dropping the case against what it considers
unfair treatment of foreign car companies, the foreign ministry
official said.

The request will be made in June, thereby allowing for
progress in direct negotiations between the two nations, he
added.

Jakarta's so-called national car is actually being imported
from South Korea under a joint venture arrangement with Kia
Motors while Indonesia builds its own auto factories.

Timor Putra Nasional is said to have sold less than 1,000 cars
a month since launching sales in October, though purchases have
purportedly climbed in recent weeks.