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.