RI still looking to settle car-policy row bilaterally

JAKARTA (JP): Indonesia has about eight months to continue bilateral talks with the complainants of its national car policy before the World Trade Organization's (WTO) dispute settlement panel process can no longer be stopped, Minister of Industry and Trade Tunky Ariwibowo said yesterday.

Tunky said the WTO panel on the national car policy could not be stopped once it came close to reaching a verdict.

"This means we still have eight to nine months to continue bilateral talks and we hope the talks can stop the panel process altogether," Tunky said.

He was speaking after a visit by Vice President Try Sutrisno to the ministry. During the five-hour visit, Try held discussions with officials about the progress of the ministry's programs.

The discussion was attended by some 300 middle to high-ranking officials, including heads of the ministry's provincial offices and directors of state enterprises overseen by the ministry.

Tunky said that although Indonesia still had time to hold bilateral talks with Japan, the European Union and the United States -- all of whom had requested panels from the WTO's Dispute Settlement Body (DSB) -- "difficulties" were emerging in the talks.

He refused to comment further on the bilateral talks.

The U.S on June 25 joined the EU and Japan in pressuring Indonesia over its car policy by asking the WTO to set up a panel to look into the dispute.

Indonesia blocked the first formal request. Under WTO rules, a country has the right to block a request to form a panel the first time it is sought.

Trade diplomats expect the U.S to take its complaint about Jakarta to the next WTO body meeting on July 30 when the request will be approved automatically.

The DSB has already set up a panel to assess complaints from the EU and Japan on the car policy. It will have from six months to nine months to come up with a ruling.

Japan, the U.S and the EU argue that the tax and import duty breaks for Indonesia's national car firm headed by Hutomo Mandala Putra, the youngest son of President Soeharto, discriminate against their exports and violate a range of WTO accords.

Indonesia has denied the import and tax concessions enjoyed by PT Timor Putra Nasional -- which produces its "Timor" sedan car in South Korea at a Kia Motors Corp plant -- break WTO rules.

Tunky said the three complainants had submitted the names of their candidates for the three-member panel. Only one, not three separate panels, would be created to settle the dispute.

"If, by today (yesterday), the four countries in dispute fail to approve the candidates, the WTO's director general may select the panel members himself," Tunky said.

He said this would disadvantage Indonesia because Indonesia would have to accept the panel created by the WTO.

Earlier reports said that if the panel was set up and its findings went against Indonesia, an appeal could be lodged and an appeals board would have 60 days to decide.

If the final ruling went against Indonesia, then it would have to bring its policy in line with the panel's recommendations or agree to pay compensation for the value of trade lost to the complainants.

If it refuses to do either, the WTO could authorize the complainant states to take trade measures against Jakarta that would compensate for the losses they suffered as a result of the Indonesian national car policy. (pwn)