U.S asks for WTO panel on Indonesia car policy

U.S asks for WTO panel on Indonesia car policy

GENEVA (Reuter): The United States, joining the European Union and Japan in pressuring Indonesia over its car policy, asked the World Trade Organization (WTO) yesterday to set up a settlement panel to look into the dispute, officials said.

Trade officials said Indonesia blocked Washington's first formal request put to a meeting of the WTO's Dispute Settlement Body (DSB) where a country has the right to hold up the creation of a panel the first time it is sought.

Trade diplomats expected the United States to bring its complaint against Jakarta to the next meeting of the WTO body on July 30 when the request would be approved automatically.

The DSB has already set up a panel to consider complaints from the European Union and Japan on Indonesia's car policy. It would have from six to nine months to come up with a ruling.

The United States, like the two other trade powers, argues that Indonesia's tax and import duty breaks for an Indonesian car firm headed by Hutomo Mandala Putra, the youngest son of President Soeharto, discriminates against its exports and violates a range of WTO accords.

The case has wide implications for developing nations in the 131-member WTO seeking to build their own industrial base to compete with goods from the richer economies.

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

Indonesia told the DSB, on which all members of the WTO can sit, that it felt the United States "must have felt pressurized" to join the EU-Japan move for a panel, trade officials said.

Washington told the meeting that it decided to press ahead with the panel request after nearly a year of bilateral talks, including intensive discussions in the past two weeks, failed to produce any sign of movement from Jakarta, trade officials said.

Washington also said it intended to continue bilateral discussions with Jakarta in search of a solution, they added.

If the panel is set up and its findings are against Indonesia, an appeal can be lodged and an appeals board would then have 60 days to decide. If the final ruling goes against Indonesia, then it would have to bring its policy in line with the panel recommendations or agree to pay compensation for the value of trade lost to the complainants.

If it refused to do either, the WTO could authorize complainant states to take trade measures against Jakarta that would compensate for the losses they have incurred.