U.S. vs Indonesia on WTO trade agenda

U.S. vs Indonesia on WTO trade agenda

JAKARTA (JP): The dispute between the United States and
Indonesia over automobiles will come before the World Trade
Organization this week, officials said Friday.

At a meeting of the WTO's Dispute Settlement Body (DSB) on
Wednesday, Washington will ask for a panel to study U.S.
complaints that Indonesia's widely criticized national car policy
violates global open trading agreements, Reuter reported from
Geneva.

Indonesia blocked a first U.S. request for a panel last month,
but under WTO rules approval will be automatic this time.

Earlier in June, the DSB -- on which all current 131 members
of the trade body can sit -- set up a panel to study similar
complaints from the EU and Japan.

U.S. officials have indicated they would probably agree for
their case to be heard by the same three-man board.

The three powers argue that tariff and tax concessions
favoring cars produced by the PT Timor Putra Nasional company,
which currently produces its Timor sedan in South Korea, amount
to discrimination against their cars.

Indonesia insists that it is not in breach of WTO rules.

Timor's president, Soemitro Soerachmad, said Saturday that his
company had received a letter from Kia Motor Corp guaranteeing
that the current financial turmoil of the South Korean company
would not put a stop to the national car program.

"The guarantee letter was signed by Kia Motor's chairman, and
it proves that the Korean giant company is serious about its
cooperation with us," Antara quoted him as saying Saturday.

"We will not reevaluate the car program because of the strong
intention of the company," he said, adding that the letter was
not requested by his company.

Soemitro said he was optimistic that Kia Group, South Korea's
eighth largest conglomerate, would not go bankrupt because of its
government's support in bailing out the group.

"The South Korean government has injected US$200 million into
Kia to help it handle its financial problems. The group also has
a rescue plan," he said.

The government granted Timor Putra exclusive rights to
manufacture the so-called "national car" last year.

Timor currently imports fully assembled Sephia sedans --
renamed Timor -- from Kia, but plans to produce the car here when
its manufacturing facilities are fully built.

The national car receives import duty and luxury tax
exemptions, making it over 60 percent cheaper than other cars in
the domestic market.

Soemitro told Antara that his company would keep its current
cooperation with Kia Motor, but might consider cooperating with
another country in the future.

"But we would not hastily stop our cooperation with Kia, just
because of the current problem. Besides, we still need the
technology transfer for the national car program," he said.

The Kia Group was recently placed under bank protection to
prevent insolvency, making it the sixth conglomerate in South
Korea to either go insolvent or be bailed out this year.

The group was $10.8 billion in debt, including $6.8 billion
borrowed from banks. (das)