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.