WTO forum not expected to discuss RI's car policy

WTO forum not expected to discuss RI's car policy

JAKARTA (JP): The dispute between Indonesia and Japan over the
former's national car policy is not scheduled to be discussed at
the ministerial conference of the World Trade Organization (WTO)
in Singapore this December, according to a WTO executive.

"Individual disputes are not likely to be discussed at the
meeting," the organization's deputy director general, Anwarul
Hoda, said yesterday.

Hoda is here to attend a three-day Asia-Pacific senior
officials meeting, which started yesterday, in preparation for
the WTO ministerial meeting.

He refused to comment on Indonesia's car policy but noted that
Indonesia is not alone in pursuing an automotive initiative which
concerns other countries. He cited Brazil and the United States
as another example.

"You know that the dispute is there and some parties are
expressing concern and it is not wise for the (WTO) secretariat
to give any position... or to give its views on whose position is
strong and on whose position is weak," Hoda said.

When asked if Japan had filed the case with the WTO, Hoda
replied: "When I left Geneva yesterday, there had been no formal
move from Japan."

Japan, which controls more than 90 percent of the Indonesian
auto market, has criticized Indonesia's auto policy as
discriminating against foreign firms and has threatened to take
the case to the WTO if Indonesia does not modify the policy.

Under the policy, introduced last February, producers of a
national car are granted exemption from import duties and luxury
sales taxes that add about 60 percent to the price of a car.

PT Timor Putra Nasional -- a company controlled by President
Soeharto's youngest son Hutomo "Tommy" Mandala Putra -- was
picked as the first national car supplier and is required to
ensure the cars' local content is at least 60 percent by the end
of the third year of production.

In a joint venture with Kia Motors Corp. of South Korea, Timor
Putra is allowed to import its cars from South Korea for one
year, until its own assembly facilities are ready.

Some 2,000 cars made by Kia arrived at the Tanjung Priok port
in Jakarta last week.

The importing of the cars, however, has been messy. They
arrived without bank guarantees, as required by the government.
In the absence of the guarantees, the government has not allowed
the cars to clear customs.

The cars are currently being stored at a private entrepot in
Cengkareng, close to Soekarno-Hatta international airport.

Director General of Customs and Excise Soehardjo Soebardi
claimed yesterday that his office had never been formally
informed about the importation of the duty-free cars.

Bilateral

Minister of Industry and Trade Tunky Ariwibowo said yesterday
that he would prefer to solve the dispute with Japan bilaterally
rather than seeing the issue taken to the WTO.

He said he will discuss the national car policy with his
Japanese counterpart Shumpei Tsukahara later this month, when the
latter is due here for a meeting of economic ministers from Japan
and the Association of Southeast Asian Nations.

"It is an opportunity to discuss the national car issue
again," Tunky told journalists before the monthly full cabinet
meeting.

However, Tunky said, if Japan insists on taking the case to
the WTO, Indonesia will be fully prepared. He believes that
Indonesia has not violated any trade agreements.

Indonesian Minister/State Secretary Moerdiono said Tuesday
that should the matter be brought to the WTO, he hoped the
international body would conduct "fair arbitration."

"All along, Indonesia has intended to produce a national car,"
Moerdiono said, adding that "we do not see any reason to change
this policy."

Meanwhile, economist Mari E. Pangestu was pessimistic
yesterday over whether Indonesia could win the case if it goes to
the WTO.

Japan argues that Indonesia is breaching most-favored nation
principles by allowing duty-free imports of cars from only South
Korea. However, Indonesia contends that, as a developing country,
it has the right to protect its infant industry.

"In terms of our infant industry argument, we have to prove
that our 20-year old auto industry is still an infant. That's not
easy," Mari said.

Tommy said in a statement yesterday that he believes Japan's
threat to take Indonesia to the WTO will not materialize.

"The threat of taking the national car policy to the WTO will
only be a matter of talk. Why don't the Japanese auto firms fully
manufacture cars in Indonesia rather than wasting their time
talking about the WTO," Tommy said. (rid)