U.S joins EU-Japan WTO panel on car row

U.S joins EU-Japan WTO panel on car row

GENEVA (Reuter): The World Trade Organization (WTO) acted in favor of a U.S. complaint on Indonesia's car policy yesterday, ruling for the dispute to be settled by a panel set up to consider similar requests by the European Union (EU) and Japan.

A panel set up on June 12 by the WTO's Dispute Settlement Body (DSB) would examine the U.S. request, trade officials said.

The WTO had established the panel to look into EU and Japanese complaints that Indonesia's national car policy violates open trade.

Approval of the U.S. request was automatic under WTO rules after Indonesia blocked Washington's first formal demand last month at the DSB, where a country has the right to hold up creation of a panel the first time it is sought. The panel has six months to come up with a ruling.

The three trade powers argue that tax and import duty breaks granted to the PT Timor Putra Nasional car firm headed by Hutomo Mandala Putra, the youngest son of President Soeharto, discriminate against their automobile exports and violate a range of WTO accords.

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

Indonesia denies that the concessions to the national company, which produces its "Timor" sedan car in South Korea at a plant of the South Korean Kia Motors Corp, break WTO rules.

If the panel rules against Indonesia, an appeal can be lodged and an appeals board would have 60 days to decide.

If the final ruling goes against Indonesia, 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 complainants.

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