Japan has initiated procedures to file a request with the World Trade Organization to set up a dispute settlement panel to examine Indonesia’s national car policy, according to the Ministry of International Trade and Industry.

MITI said it notified the Geneva-based trade watchdog April 17 of its intention to call for the creation of the panel — a step required for Japan to file a formal request at a meeting of the WTO’s dispute-settlement body on April 30. During a news conference April 18, MITI chief Shinji Sato said Japan has already waited long enough for Indonesia to correct its car policy. “But no such improvement has been made and now we want to put an end to this long-pending issue,” he said.

Jakarta’s controversial auto policy grants 100 percent exemption from tariffs and luxury taxes to Pt Timor Putra Nasional, an automaker controlled by the youngest son of President Suharto. The policy allows the company to produce so-called national cars for up to three years.

The Timor cars, however, are now assembled in South Korea by the automaker’s partner, Kia Motors Corp., and imported free of tariffs. Tokyo maintains that such a policy is incompatible with the most-favored-nation principle and other WTO rules.

Japan initially filed a complaint with the WTO last October and has held bilateral talks with Indonesia since early November both within and outside the WTO framework. But the two governments have so far been unable to reach any agreement.

At present, Japanese automakers, including Toyota Motor Corp. and Nissan Motor Co., control about 90 percent of the Indonesian car market.

“Japan decided to go it alone,” a senior Japanese official based in Geneva said, “because we found out that Indonesia is negotiating an out-of-court deal with the U.S. and the EU.” The official said, “We heard that Indonesia is even proposing concrete terms of a deal with the U.S. without making a similar offer to Japan.”

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