Southeast Asian Barriers Cited

Autoparts Report, April 25, 2000

The trade barriers report criticizes the Philippines for requiring a foreign automaker to invest $10 million in local parts manufacturing as a requirement for setting up a vehicle assembly plant. Vehicles produced at this plant must contain at least 40 percent domestic parts content. An automaker can reduce this local content requirements if it exports at least $200 million worth of vehicles per year.

The U.S. government warns Indonesia not to revive its "national auto policy" that was designed to benefit national vehicle maker PT Timor Putra Nasional. USTR also warns the Indonesian government not to impose quotas on the importation of luxury vehicles.

In response to a WTO dispute panel ruling last year, Indonesia undertook a "major revision of its national automotive polices." The new policy eliminates tariff and tax incentives for local content production, the USTR report says. Indonesia has "simplified" its duty on imports of autoparts for local assembly of cars and minivans to a flat rate of 15 percent, the report adds.

Neighboring country Malaysia is criticized by USTR for maintaining high duties and quotas on the importation of vehicles and parts. Automakers are required to have between 45 percent and 60 percent local parts content for cars and commercial vehicles manufactured in the country.

USTR takes Australia to task for failing to comply with a World Trade Organization dispute panel finding that it end export subsidies for producers of automotive leather. The panel said that Australia's decision to require recipients of the subsidies to repay only a small amount was "insufficient to satisfy the WTO requirement that the subsidy be withdrawn," the report says.