WTO set to create panel in car row

WTO set to create panel in car row

GENEVA (Reuter): The World Trade Organization (WTO) appears set to create a dispute panel sought by the European Union and Japan on Indonesia's controversial "national car" policy, diplomats said Friday.

Both trade powers have put their request on the agenda of a meeting of the WTO's Dispute Settlement Body (DSB) next Thursday for the second time, and under the trade body's rules a panel will be established automatically.

Indonesia blocked earlier panel bids by the two, who are strongly supported by the United States, but the rules do not allow it to repeat this action.

The EU and Japan argue WTO open trade regulations are violated by the policy, which gives special tax exemptions from tariffs and taxes to national carmakers.

The concessions have so far benefited only a joint venture between a company headed by a son of Indonesia's President Soeharto and South Korea's Kia Motor Corp, which produces a sedan known as the Timor at a Kia plant.

The two powers, as well as the United States which is also expected to seek a panel in the coming weeks, argue the policy discriminates against their automobile exports to Indonesia by making the Timor cheaper.

Jakarta has rejected the complaint, insisting that it is not breaking WTO rules.

A panel -- made up of three neutral experts -- would have six months to come up with its findings. But these could be appealed by either side and it could be up to 18 months before a final WTO ruling is approved by the presently 131 members.

If the case should go against Indonesia, it could not block a final ruling -- as it would have been able to do in the WTO's predecessor body, the General Agreement on Tariffs and Trade -- and would be asked to bring the policy in line with the rules.

If it declined, the complainant powers would be authorized to take trade measures against Indonesian exports to the value of the trade they say they have lost.