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.