RI national car talks open in Geneva today

RI national car talks open in Geneva today

GENEVA (AFP): Bilateral talks aimed at ending a dispute over
Indonesia's national car policy, criticized for breaching
international trade rules, are to open today in Geneva in an
attempt to avert outside adjudication.

Japan, the European Union and the United States in October
lodged a complaint with the World Trade Organization (WTO), which
allows parties 60 days to consult to try and settle trade sores.

That period has already lapsed, but the trio are giving talks
with Indonesia another chance.

"Under the disputes settlement understanding, we have a right
to request establishment of a (disputes) panel after 60 days. We
have passed that (period of time) but we rather requested the
continuation of consultations," a Japanese trade source said here
yesterday. "I hope we're on the way to resolving the issue
bilaterally.

A first round of talks was held in November and the current
series, which will feature separate private meetings, runs until
Thursday. Japan is slotted in for today and the European Union
Thursday.

"The United States will be meeting with the Indonesians later
in the week on a bilateral basis," said a U.S. official here.

The talks are aimed at making Indonesia revoke measures
favoring its national car, which is currently being imported from
South Korea under a joint venture between PT Timor Putra Nasional
and Kia Motors.

President Soeharto in February ruled that Timor Putra,
controlled by his youngest son Hutomo Mandala Putra, would be
granted exemptions on import duties and luxury taxes, which add
about 60 percent to the price of other cars in Indonesia.

The cars, which eventually need to meet a 60 percent local
content target, will be imported until domestic production begins
in 1998.

"Basically, there are a number of preferences that the Korean
imports are getting, this is the basis of our concern," said a
European trade official here. "Also separate treatment is being
given on local content which doesn't conform with TRIMs (trade
related investment measures)".

Under a TRIM agreement, the WTO seeks to ban investment
policies that distort trade -- including the imposition of
particular levels of local procurement by an enterprise.

If the three parties fail to reach agreement with Indonesia,
they could ask the WTO to set up a dispute panel to examine the
case.

"It is one option that we have to seriously think about," said
the Japanese trade source.

"We are very dissatisfied with (Indonesia's) measures
themselves. If there are no positive developments from the
Indonesian side, then obviously there is the possibility of
requesting a panel," the European trade official said.

A panel must convene within 30 days after its establishment
and issue a final report within six months.

Reports from Seoul have quoted a Kia Motors executive as
saying that Kia and Timor Putra planned to produce 50,000 vans
per year starting in 1998 and added that the vehicles would
obtain the same tax treatment as the Timor Sedan.

The joint venture has so far imported at least 10,500 Timor
Sedans from South Korea.