WTO to create panel on national car policy

WTO to create panel on national car policy

GENEVA (Reuter): The World Trade Organisation (WTO) agreed yesterday to create a panel to look into complaints from Japan and the European Union that Indonesia's national car policy violates open trading rules.

Approval of a panel at a meeting of the WTO's Dispute Settlement Body (DSB) was automatic as earlier requests by both Japan and the EU were blocked by Indonesia -- an action only permitted once under DSB procedures.

The two trade powers argue that the policy, aimed at giving a boost to Indonesia's domestic car industry but so far only aiding PT Timor Putra Nasional, a firm headed by a son of President Soeharto, runs against several WTO accords.

But the case has much wider implications for developing countries in the 131-member WTO seeking to develop their own national industrial base to enable it to compete with goods from the richer economies.

Indonesia has persistently denied that import and luxury tax concessions enjoyed by Timor Putra, which currently produces its "Timor" sedan car in South Korea at a plant of the South Korean Kia Motors Corp break WTO rules.

Earlier last month, the Indonesian government made it compulsory for government agencies and state companies to include Timor car in their sedan procurement programs in a bid to bolster the car sales.

The EU, Japan and the United States -- which has also complained to the WTO, but has not yet asked for a panel of its own -- say the policy unfairly discriminates against their own cars exported to Indonesia.

On Thursday Japan told the DSB -- on which all members of the WTO can sit -- that consultations with Indonesia over the past few weeks in a bid to reach a settlement had failed to produce any sign of movement from Jakarta.

But Tokyo would continue talks with Indonesia, in parallel with the panel process, to find a satisfactory conclusion "and hoped that objective was understood and shared" by Jakarta, a Japanese official was quoted by diplomats as saying.

An EU official told the DSB that Brussels had also failed to convince Indonesia to adjust the policy and bring it into line with WTO rules on goods trade, subsidies and trade-related investment measures (TRIMs).

Trade sources said Indonesian diplomats present made no comment, and the United States did not immediately indicate whether it wanted its complaint to be studied by the panel -- which will look at the Japanese and EU charges.

But under WTO rules Washington can ask to join in within the next 10 days.

The three-member panel, which has to be created within 20 days, will have from six to nine months to come up with its finding.

According to WTO rules, the names of the persons to be appointed to the panel are proposed by the WTO secretariat from the list of governmental and non-governmental experts it maintains.

The persons in the list are well-qualified senior officials of member countries and members of their delegations to WTO.

An appeal can be lodged gains the panel's decision , and an appeals board would then have 60 days to come to a decision.

But 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 the complainants.

If it refused to do either, the WTO could authorize Japan and the EU to take trade measures against Indonesia that would compensate for the losses they have incurred.