RESTRICTEDWORLD TRADE
ORGANIZATIONG/TRIMS/M/14
15 August 2002
(02-4463)
Committee on Trade-Related Investment Measures
MINUTES OF THE MEETING HELD ON 10 JULY 2002
Note by the Secretariat
1. The Committee on Trade-Related Investment Measures met on 10 July 2002 under the
Chairmanship of Mr. Vassili Notis (Greece).  The Committee adopted the agenda contained inWTO/AIR/1846.
A. N
OTIFICATIONS UNDER ARTICLE 6.2 OF THE TRIM S AGREEMENT
2. The Chairman said that notifications submitted under Article 6.2 were listed in document
G/TRIMS/N/2/Rev.9.  Chinese Taipei and China had recently submitted notifications (contained in
G/TRIMS/N/2/Rev.9/ Add. 4 and 5).  A number of Members had not yet complied with the
notification requirement.  He recalled the Committee's decision taken in September 1996 on the
procedures for the submission of notifications under Article 6.2, and urged all Members to submit
notifications as soon as possible.
3. The Committee agreed to revert to this item at a subsequent meeting.
B. OUTSTANDING IMPLEMENTATION ISSUES – A GREEMENT ON TRADE -RELATED INVESTMENT
MEASURES
4. The Chairman recalled that the decision of the Council for Trade in Goods (CTG) of
7 May 2002, whereby the TRIMs Committee had been assigned the responsibility for conducting
work on the outstanding implementation issues contained in tirets 37-40 of document
JOB(01)/152/Rev.1 and for reporting regularly to the CTG on progress on this issue.  These were:
- Tiret 37:  Developing countries shall have another opportunity to notify existing TRIMs
measures which they would be then allowed to maintain till the end of the new transitionperiod.
- Tiret 38:  The provisions of Article 5.3 must be suitably amended and made mandatory.- Tiret 39:  Developing countries shall be exempted from the disciplines on the application of
domestic content requirement by providing for an enabling provision in Articles 2 and 4 to
this effect.
- Tiret 40:  Specific provisions shall be included in the Agreement to provide developing
countries the necessary flexibility to implement development policies (intended to address,among others, social, regional, economic, and technological concerns) that may help reduce
the disparities they face vis-à-vis  developed countries.
5. He also referred to the decision of the TRIMs Committee taken at its meeting on 21 May, that
the Chairman of the Committee would make an oral report to the CTG on new developments anddiscussions under this agenda item, after each meeting of the TRIMs Committee.  He had presentedG/TRIMS/M/14
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the first of such reports at the meeting of the CTG on 13 June.  He noted that no new written
submissions had been received from Members on how they believed a satisfactory solution could be
produced to respond to their concerns about the relevant tirets.  He recalled that the TRIMs
Committee had been asked to make a final report to the CTG on its discussions of the outstanding
implementation issues, and that the last meeting of the Committee for this year was scheduled for14 October.  He then invited Members' comments on tirets 37-40.
6. The representative of Brazil said that his delegation would shortly be submitting to the CTG a
written contribution on these issues.  Recalling paragraph 12(b) of the Doha Ministerial Declaration,
he said that the outstanding implementation issues re ferred to in that paragraph included those set out
in tirets 37-40.  In addition, Article 9 of the TRIMs Agreement established a comprehensive provision
for its review, which included the possibility for Members to propose amendments to its text.
Furthermore, issues related to TRIMs had also been considered in the discussions of the WorkingGroup on the Relationship between Trade and Investment under paragraph 22 of the Doha Ministerial
Declaration.  Against this background, he wanted to clarify the rationale behind tiret 40, which
originated in a proposal tabled by Brazil in th e context of the preparatory process for the Seattle
Ministerial Conference.  In his delegation's view , since the end of the Uruguay Round and the entry
into force of the WTO Agreements, the argument against the use of investment measures had lostmuch of its theoretical strength.  New developments in the theory of international trade had raised
doubts about perfect competition models, which were increasingly considered as unrealistic or based
on questionable assumptions.  Furthermore, the argument that resort to TRIMs would inevitably result
in trade distortions had not been proved by conclusive empirical evidence.  The recent joint study by
the WTO and UNCTAD Secretariats (G/C/W/307 and Add.1) was relevant in this regard.  While itwas true that this study did not add up to a decisive argument in favour of local content, trade
balancing or export performance requirements, it did, however, weigh against any general assumption
that trade would be undistorted or less distorted in the absence of such requirements.  History
provided many examples of successful resort to investment measures to address developmental
objectives as well as to offset trade distortive effects of certain forms of corporate behaviour, which,in the case of developing countries, might affect the efficient allocation of resources in a more
negative way than investment measures per se .  He pointed out that other  measures considered to be
WTO compatible had turned out to be much more trade distortive, particularly in sectors of export
interest to developing countries, than those relate d to investment.  An illustrative example of such
measures were  preferential rules of origin.
7. The TRIMs Agreement had not taken into account obvious structural inequalities among
Members and, apart from already expired transitional periods, the architecture of the agreementincorporated no specific clauses for special and differential treatment (S&D).  The absence of
effective and operative clauses in that regard had made the TRIMs Agreement one example of
"reverse" S&D treatment to the extent that it imposed the same level of obligations on countries that
were inherently different.  While developed countries had had decades to choose when, how and in
which economic sectors to apply such measures, developing countries had had their right to do sorevoked by the disciplines of the TRIMs Agreement.  Article 4 did not go in the direction of
addressing these problems and was thus insufficient.  As experience had shown, there could be no a
priori  assumption that investment measures were inherently trade-restrictive or distortive.
Nevertheless, if it was demonstrated that a measure applied by a developing country did have a direct
and significant distortive effect on trade, causing serious injury to the trade interests of anotherMember, it would seem more adequate to adopt a case-by-case approach in order to remedy these
adverse effects.
8. He said that the proposal in tiret 40 was that specific provisions should be included in the
TRIMs Agreement to provide developing countries with the necessary flexibility to implement
development policies intended to address social, regional, economic and technological concerns,which might help reduce the disparities they faced vis-à-vis  developed countries.  He thought it usefulG/TRIMS/M/14
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to refer to the discussions that had taken place in the Working Group on the Relationship between
Trade and Investment concerning "development provisions", which was one of the elements of
paragraph 22 of the Doha Declaration.  These discussions had made it clear that the issue of flexibility
could not be satisfactorily addressed through preambular commitments, best-endeavour clauses,
technical assistance or transitional periods, in the absence of more substantial and operationalcommitments within the architecture of any agreement related to investment.  In this regard, his
delegation subscribed to the assessment expressed in paragraphs 15-19 of the Secretariat's Note on
development provisions (WT/WGTI/W/119).  Bearing in mind that flexibility could not be effective
unless it was an integral part of the design and structure of any disciplines, in tiret 40 his delegation
had proposed the introduction of provisions in the TRIMs Agreement that would effectively allow
developing countries to resort to investment measures in order to achieve specific economic, social
and technological development objectives, and that, at the same time, would allow any Memberwhose trade interests were affected by the use of such measures to have resort to remedial action to
counter those adverse effects.  This was something that required further analysis in terms of what
procedures would need to be put in place, such as, for example, the notion of a "causal link".  This
was the intention underlying his delegation's original proposal under tiret 40, which would be further
clarified in its future submission.
9. The representative of India said that his delegation had already explained its submission
(WT/GC/W/203), which was tabled in the pre-Seattle Ministerial Conference phase and which raised
some implementation concerns with respect to the TRIMs Agreement.  Some of these issues had been
discussed in the pre-Doha phase and other issues re mained outstanding.  At Doha, Ministers had given
a clear mandate that all the negotiations on outstanding implementation issues should be an integralpart of the work programme.  Referring to paragraph 12(b) of the Doha Ministerial Declaration, he
recalled that the outstanding implementation issues s hould be dealt with as a matter of priority by the
relevant WTO bodies, which were to report to the Trade Negotiations Committee by the end of 2002
for appropriate action.  His delegation had already given detailed comments on tirets 37-39, which
were suitably reflected in the minutes of the Committee's last meeting.  Nevertheless, he wished tohighlight some key issues with respect to the relevant tirets.  He fully supported the comments made
by Brazil regarding the role and importance of performance requirements as a tool for developing
countries to pursue their social and developmental objectives, as well as the comments regarding the
imbalances in the TRIMs Agreement.  His delegation looked forward to Brazil's submission and to
further debate on the outstanding implementation issues.
10. He reiterated that the TRIMs Agreement had denied developing countries the opportunity to
use certain performance requirements incidental to investment, especially those related to localcontent requirements.  In his view, each country went through different stages of development and, at
different stages, it required different sets of development policy tools.  Domestic content requirements
were an essential policy tool for building domestic industry.  The fact that only one least-developed
country had notified a TRIM reflected that trade-related investment measures and certain other types
of performance requirements were suitable for use by countries only when they reached a particularstage of development.  As brought out in th e WTO/UNCTAD joint study and in other studies,
developed countries had used such measures for long periods of time when they were at the
intermediate or less advanced level of developmen t.  In contrast, many low-income countries and
least-developed countries had been denied the use of these development policy tools even before
certain sectors in their development process had reached the threshold where they could benefit fromTRIMs.  Therefore, these countries should be allowed flexibility to use TRIMs, based on their specific
developmental, financial and trade needs.  They should not be denied the opportunity to use this
important tool when they reached a certain stage in their development process.
11. He said that Article 5.1 of the TRIMs Agreement had given Members a limited time-period of
90 days to notify TRIMs inconsistent with the provisions of the Agreement for the purpose of theirelimination.  The agreement and its illustrative list were so complex that most developing and least-G/TRIMS/M/14
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developed countries had not had a clear idea of what measures they were required to notify.  For that
reason, many countries had notified measures long after the deadline had expired.  It was clear that
developing and least-developed country Members should be provided another opportunity either to
notify existing TRIMs not yet notified, or to initiate a new measure and notify it as a TRIM.  The
transition periods of 5 and 7 years for these countries had not been helpful, because they were basedon the assumption that developing countries would not only have entered sustainable growth during
such time-period, but that they would also have caught up with the developed countries.  Developing
countries were at a different stage of economic development.  As their development process gathered
momentum, these countries tended to embark on the development of their domestic industries.  The
Uruguay Round negotiations had failed to build in the developmental dimension in an effective
manner into the TRIMs Agreement.  With a view to ensuring that TRIMs could be maintained by
developing countries until such time as their developmental needs demanded, there was a need forincreased transition periods with sunset clauses linked to some kind of objective criteria, such as  per
capita  income or other objective parameters.  Article 5.3 of the TRIMs Agreement provided for the
extension of the transition period if a Member so requested, and in this process the Council for Trade
in Goods should take into account the individual development, financial and trade needs of the
Member in question.  Objective criteria were needed in this context for deciding on the individualneeds of Members.
12. He said that UNCTAD's World Investment Report 2001 had underlined the role played by
domestic content requirements in linkage creation, which was an essential requirement for
industrialization.  The fact that many developed countries and the newly-industrialized countries had
successfully resorted to TRIMs and other performance requirements during their industrializationprocess, pointed to the crucial role such measures co uld play in this process.  It was true that such
measures, when used indefinitely and indiscriminately over a long period might lead to economic
inefficiency.  However, if local content and other performance requirements did not prove to be
development-friendly, developing countries themselves would decide against their use.  He stressed
that various empirical studies had shown that affilia tes of certain transnational corporations bought the
bulk of their imports from parent and other affiliated companies, getting only a small proportion of
their purchases from unaffiliated suppliers within the host countries or in third countries.  UNCTAD's
Trade and Development Report 2002 had highlighted the poor record of value-added and linkages
creation by transnational corporations.
13. It was important that performance requirements remained available to developing countries in
order to ensure that foreign investment contributed to the achievement of their development policy
goals.  With this rationale in mind, his delegation had proposed that developing-country Membershave the right to maintain TRIMs presently prohibited under the TRIMs Agreement, so long as their
per capita  income remained below a certain threshold figure.  Alternatively, other objective criteria
could be used for this purpose.  Flexibility should be retained until the per capita  i n c o m e  o f  t h e
Member concerned exceeded the pre-determined figure.  His delegation looked forward to a
constructive and meaningful dialogue in the Committee on this proposal, which, if accepted, wouldprovide the necessary flexibility for developing countries to pursue their development policies.  India
would elaborate more on this proposal at a later stage.
14. The representative of Colombia reiterated her delegation's interest in the discussion of the
outstanding implementation issues.  In her view, it had been difficult for the Uruguay Round
negotiators to assess the exact degree of flexibility required by developing countries.  However,experience had demonstrated that the transitional period had not been long enough and that the reality
facing developing countries demanded increased flexibility.  Her delegation agreed that many
theoretical barriers had been removed, which called for an adjustment of the TRIMs disciplines in this
regard.  She also shared Brazil's comments concerning flexibility.  For this reason, her delegation
believed that the proposal in tiret 40 was an important contribution to the effective implementation ofthe development dimension.  As to how this could be done, she believed that tiret 40 included usefulG/TRIMS/M/14
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horizontal criteria such as social, regional and technological concerns.  Such objective criteria would
be very useful for the Committee's future work.  Her delegation was also interested in Brazil's
suggestion concerning remedial action to counter potential trade effects of TRIMs and looked forward
to further elaboration on this issue in Brazil's forthcoming submission.
15. The representative of China said that, although seven months had elapsed since the launch of
negotiations at the Doha Ministerial Conference, only limited progress had been achieved.  While
many developing countries had undertaken a wide range of measures to further open their markets and
to continue domestic structural reforms, which had made a significant contribution to world-wide
trade liberalization and economic globalization, S&D provisions in existing WTO Agreements for
developing-country Members were far from being satisfactorily implemented.  This had seriously
affected the confidence of developing countries in the multilateral trading system and had frustrated
their enthusiasm for the new negotiations, which, in turn, had constituted one of the main reasonsleading to the present situation of the negotiations.  He said that, even after the Doha Ministerial
Conference, there still remained a problem of co nfidence-building, particularly on the part of
developing country Members.  His delegation attached great importance to the implementation of
S&D treatment provisions in all existing WTO Agreements.  His delegation fully supported the view
that the on-going review within the framework of the TRIMs Committee should focus on theoutstanding implementation issues, through further clarification and improvement of related
provisions in the Agreement.  His delegation firmly believed that the developing Members' interests
should be fully reflected in the eventual results of both the implementation review and the new
negotiations, so that these countries' economic and trade development could be facilitated.  China
supported the discussions on the outstanding implementation issues referred to in tirets 37-40 withregard to the TRIMs Agreement with the hope that the outcome of such discussions would bring
substantive benefits to developing-country Members and address their developmental, fiscal and trade
concerns.
16. The representative of the European Communities said that it would be difficult to make much
more progress on these issues unless Members had a better foundation on which to base the
discussion, so he looked forward to the contributions which had been announced.  He made a number
of observations with respect to the interventions by Brazil, India, Colombia and China.  He believed
that one of the reasons why the WTO/UNCTAD joint study was not pertinent was the fact that most
of its results were from the 1980s, so he did not think such evidence was sufficiently updated to draw
any conclusions in the present context, where decisions on investment location were taken in a much
faster and much more dynamic environment.  He agreed that the results of the study were ambiguous
and might not give Members much guidance.  It was more important to look at what had happened inthe last ten years and how many countries had abolished their TRIMs, especially in the automotive
sector.  He thought it was very significant that a country like China had decided to join the WTO with
a clear commitment not to apply any TRIMs.  This trend and the conclusions that some of these
governments had drawn should be part of the discussion in the TRIMs Committee and Members
might wish to look further into the motives for th is.  Referring to the long-term inefficiencies that
India had mentioned, he said that, nowadays, such inefficiencies would be apparent very quickly if
TRIMs were applied.
17. He took issue with the interpretation that the TRIMs Agreement was "reverse" S&D.  As his
delegation had mentioned on numerous occasions, the TRIMs Agreement was nothing more than an
elaboration of Articles III and XI of the GATT.  If the argument of the proponents was that these
provisions should not apply to all Members of the WTO because, in order to level the playing field
national treatment was not to be required, then Members would be in a serious debate about the very
foundations of the GATT system.  It went too far to say that there was no fair play because these basic
rules applied to all Members.  He believed that there was much flexibility and S&D treatment in the
TRIMs Agreement, which allowed for phased introduction and, if well justified, for extension of thetransition period.  This was precisely what had been done.  The S&D component of the TRIMsG/TRIMS/M/14
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Agreement had been used by some Members to the maximum extent.  Neither his delegation nor any
other delegation had opposed such extensions where the case had been made that this was necessary
for development needs.  So one should not forget that these tools did exist and that some Members
had actually been able to use them.  This spoke in favour of the current system, not against it.
18. Noting that tiret 40 referred to a number of regional, social and other policies that developing
countries would like to implement, he asked whether Members really knew which of these policies
and measures were possible under the existing rules.  There was no rule requiring a country to use
local content and trade balancing requirements to achieve these objectives.  He believed that there was
already much flexibility in S&D and other provisi ons and he would rather discuss why Articles III
and XI of GATT as incorporated in the TRIMs Agreement had to be violated in order to achieve these
objectives.  His reading was that there were already quite a number of other measures that Members
could use under the existing scenario.  He wondered whether this was just a question of giving morecertainty to some of these policies, or whether a re-opening of the Agreement was really needed.
Reacting to a comment by China, he agreed that there was a debate on how to implement S&D, but he
did not believe that the TRIMs Agreement was a very good example to criticize the lack of
implementation of S&D, because the Agreement's provisions had been used in a bona fide  manner
from both requesting countries and the membership as a whole, which had given its agreement tosome of the requests for extensions twelve months ago in the Council for Trade in Goods.
19. The representative of Canada said his delegation had listened to the arguments that had been
put forward in favour of tirets 37-40, but remained unconvinced of the need to modify the balance of
rights and obligations contained in the TRIMs Agreement.  As he had indicated at the previous
meeting, in Canada's view the TRIMs Agreement was sufficiently flexible to accommodate these
requirements.  He shared the point made by the EC that the Agreement was an application of
Articles III and XI of the GATT.  He also warned  against possible confusion over the discussion on
implementation issues, which was a separate exercise from the review under Article 9 and the
discussions in the Working Group on the Relationship between Trade and Investment.
20. The representative of the United States said that, notwithstanding the further elaboration of
the proposals that had been provided at the meeting, some of the concerns that her delegation had
previously raised had not been addressed.  The main concern was with respect to anything that would
undermine the decisions concerning TRIMs extensions, which had been taken last July after two years
of debate.  Her delegation looked forward to writ ten information or further comments that would help
it understand what was the intent behind the proposals.  While she understood what had been said
about development needs, as Canada and the EC ha d pointed out, her delegation failed to see how the
existing framework did not already provide a structure for addressing those concerns.  In this regard,she fully endorsed the comments made by those delegations at the present meeting and the comments
made by Australia at the Committee's previous meeting.  Although her delegation had been told that
tirets 37-40 did not undermine the decisions taken last July and that Members would meet their
commitments with respect to those decisions, everything that she had heard at the present meeting and
at the previous one, tended to persuade her delegation otherwise.
21. She asked why other provisions of the WTO agreements could not satisfy certain
requirements to derogate from Articles III and XI of the GATT.  Her delegation considered that the
TRIMs Agreement itself provided for S&D treatment for developing countries to be able to employ
TRIMs, basically those which had already been inconsistent with Articles III and XI of the GATT, for
a longer period. Her delegation was not interested in blanket exemptions.  As stated on numerousoccasions in the course of the TRIMs Article 5.3 debate, the U.S. preferred to examine TRIMs
extension requests on a case-by-case basis.  However, it had been forced to treat all such requests
virtually equally as far as the type of remedy or the extensions that had been granted were concerned.
The present proposals would, in effect, start off with a revision of the GATT and the elimination of
the principles found in Articles III and XI, and so begin with blanket exemptions.  In this regard, sheG/TRIMS/M/14
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took note of the comments made by the EC whether this was the type of exercise Members should be
engaged in across-the-board and with respect to developing countries, among which there was much
differentiation, as had been demonstrated in other WTO bodies.  She agreed that not every country
could be treated exactly in the same way and that each country had different development needs and
situations but, she recalled, the U.S. treatment of the TRIMs extension requests had been based ondiscussions and bilateral meetings so as to allow for a better understanding of the specific needs of the
countries concerned.  At the same time, the U.S. had also met the demand to come up with a package
approach that would not grant one country a better situation over another.  Some Members that had
requested extensions had not insisted that they obtain the same type of extensions as other developing
country Members and had been more confident about their ability to bring their measures in line with
the TRIMs Agreement and GATT Articles III and XI.
22. Her delegation suggested that proponents could give some thought to existing waiver
provisions in the WTO in their future submissions.  She was not sure she fully understood Brazil's
suggestion to draft new provisions to the TRIMs Agreement that would allow a Member affected by
the application of certain TRIMs to invoke some safeguard procedure, especially when the foundation
of its proposal seemed to be to give carte blanche  for the application of TRIMs.  She was worried that
the word "development" could be taken to mean a "blank cheque", because she was uncertain howone measured development needs when one took an approach that apparently meant that certain
measures should remain in place until "development" was achieved.  Likewise, she was uncertain
what was meant by "developed", after having heard different arguments about development in various
WTO fora and after having heard developing countries arguing among themselves on how developing
countries should be treated.  However, her delegation remained willing to discuss further theproposals and looked forward to addressing some of its concerns directly with the proponents before
the next meeting of the Committee.
23. The representative of Japan said that Members had to refer to the basic principles of the
TRIMs Agreements and to Articles III and XI of the GATT.  The TRIMs Agreement was aimed at
achieving a free flow of investments, which in turn lead to a balanced economic and industrialdevelopment in all countries.  He echoed the EC representative that Members should look at recent
developments that were taking place in international trade.  There was a growing globalization of the
world's industrial base, as more and more companies established production units in different
countries.  One had to look at this new trend.  Among Asian countries, the prominent trend was to
relax investment restrictions in order to create a more attractive environment for prospective
investors, with the aim that the freer flow of investments would benefit their own economies.  In
discussing how to deal with implementation issues, Members should keep this as well as the basicWTO principles in mind.  With respect to the arguments provided by the proponents of tirets 37-40,
Japan, like others, remained unconvinced of the need to make any changes to the TRIMs Agreement.
Nevertheless, his delegation was open to discussions to address the concerns raised and looked
forward to the written submissions expected in the coming weeks.
24. The representative of Pakistan said that the implementation issues that had been raised by a
large number of Members in the preparatory process of the Seattle Ministerial Conference remained
outstanding.  The debate had continued after Seattle as a confidence-building exercise, but these
issues had remained unresolved until the Doha Ministerial Conference.  At Doha, the Ministers had
stated that they were determined to find appropriate solutions to the outstanding implementation
issues.  With respect to the decisions that had been taken last July on TRIMs issues, he confirmed thathis delegation did not challenge them.  However, the fact was that the Doha mandate had come much
later.  He wanted to remind all delegations that the Ministers had given a clear mandate to look at
these issues and to find appropriate solutions to them.  His delegation also looked forward to the
submissions proposed by Brazil and India and to cont inuing substantive and useful discussions with a
view to finding solutions on the relevant tirets.G/TRIMS/M/14
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25. The representative of Brazil said that his delegation was making an effort to engage in
genuine, constructive and substantive discussions on these issues, under the negotiating mandate of
paragraph 12 of the Doha Declaration.  He called upon other delegations to do the same.  Simply
reiterating that the TRIMs Agreement had an appropr iate balance of rights and obligations and that
such balance should not be upset would not help the debate, because the very heart of his delegation'sargument as well as the underlying assumption of  the Doha mandate on implementation issues was
the view, shared by a number of WTO Members, that there was no such balance.  He asked
delegations which thought otherwise to come up with arguments to sustain their views.  His
delegation was making an effort to explain and clarify why it believed there was an imbalance and a
disparity in the rights and obligations of th e TRIMs Agreement.  In order to avoid any
misunderstandings, he clarified that his delegation was not suggesting that Members should be forced
to use TRIMs.  Rather, it was the other way around; countries that decided to use these investmentmeasures should be allowed to do so. He recognized that in certain cases their use might be
counterproductive from an economic point of view.  However, his delegation's argument was that
countries should be allowed to have resort to these measures, and those Members that might feel
affected in their trade interests - not in their investment interests - could have resort to remedial
action.
26. Referring to the EC's comment that the implementation proposals would call into question the
basic principles of the multilateral trading system, GATT Articles III and XI, he asked what was the
rationale for the existence of the TRIMs Agreement if it were nothing more than a reiteration of
Articles III and XI of the GATT.  In response to the EC's suggestion that Members consider other
means, consistent with WTO obligations, to achieve the policies objectives mentioned in tiret 40, hesaid that countries such as Brazil lacked the public funds to spend on state aid, R&D or subsidies, thus
resorting to investment measures was, and had been, an effective means of achieving social,
technological and developmental objectives.  With respect to the U.S. comments, he asked why
anybody could ever argue that the implementation discussions had any relation with the extensions of
the TRIMs transition period that had been granted the previous year by the Council for Trade inGoods. In his view, there was no connection at all.  As regards the reference that had been made to a
possible blank cheque, he said that his delegation was not in any way seeking that.
27. The representative of Mexico said that his delegation supported the proposal in tiret 37 to
provide another opportunity for developing and least-developed countries to notify measures which
had not yet been notified and to discuss the conditions for their maintenance up until the end of the
new transition period.  However, any new authorized period should be determined on a case-by-case
basis, as had been done in the previous extension process, because there might be measures thatwould not deserve such a long transition period.  As for tiret 38, his delegation failed to see the point
of the proposed change to Article 5.3.  If the purpose of the change was to deal with the notification
process, Mexico could accept this proposal.  However, if the intention was to allow the newly
notifying countries to obtain a further extension, this would go counter to what Mexico had stated
regarding tiret 37 and there would be an inconsis tency between the two tirets.  Mexico took note of
the proposal and invited the parties concerned to indicate the type of amendment which they wanted
to propose so as to analyze, first of all, the viability of the proposal and, second, whether it was
consistent with the objectives of the TRIMs Agreement and the progress made so far in its
implementation.
28. With respect to tiret 39, while agreeing with other delegations that it would be desirable to
continue studying the concerns of other Members, his delegation was not ready to accept anything
that would upset the existing balance of rights and obligations contained in the TRIMs Agreement.
Throughout the Doha Declaration there was a clear intention to remove the disparities with respect to
those countries which had not been fully integrated in the multilateral trading system.  However, the
Doha Declaration spoke about not creating subcategories of countries, and about helping Members tocomply with their obligations as incurred up to now.  His delegation did not see any reason to provideG/TRIMS/M/14
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further flexibility regarding local content requirements, because otherwise there would be no reason
for permitting further notifications.  He shared the view expressed by other delegations that such an
amendment would be contrary to the provisions of Article III of GATT and of Article 2 of the TRIMs
Agreement.  Regarding tiret 40, in Mexico's vi ew any amendment that would alter the delicate
balance between the rights and obligations under the TRIMs Agreement would be unacceptable.  Hecalled for caution regarding the language being proposed in tiret 40, as it was too broad and could
give rise to concealed restrictions under the title of development policies.
29. The representative of Malaysia said that it was mandatory upon Members to discuss the
implementation issues, as provided by Ministers in Doha, and that Members should learn to separate
these issues from the July 2001 decisions.  In this regard, he wanted to make it absolutely clear that
Malaysia was fully committed to the elimination of its TRIMs by the end of 2003.  In his view,
Members should be able to discuss these issues objectively and come up with some creative solutionsbecause Ministers had so mandated, otherwise Members should not have accepted these as
implementation tirets in Doha.  He urged all delegations to discuss these issues in-depth and
objectively to see how they could be resolved.  He reiterated that his delegation would have serious
difficulties with any proposals that would go in the direction of further dividing the ranks of
developing countries, which would be against the spirit of the multilateral trading system and theobjective of strengthening it.
30. In response to the questions raised by the EC and the U.S., the representative of India said
that the basic point his delegation was making was that the Uruguay Round negotiations failed to
build the development dimension in an effective manner into the TRIMs Agreement.  Although
developing and least-developed country Members ha d been given transition periods of 5 and 7 years,
the assumption was that during these periods they would have achieved a certain level of development
or economic growth.  This had not happened; transition periods had not helped.  His delegation
argued that what developing and least-developed countries needed was more flexibility in using these
important performance requirement tools.  Nobody had disputed that the developed countries had
used them in their intermediate stage of development.  Certain Members currently at that stage ofdevelopment were using these measures in an effective and positive manner, without creating
distortive effects.  That flexibility should be allo wed to those countries for using such measures.  His
delegation was not asking for a blank cheque;  rather it was arguing that developing countries should
be given the option to use such tools at a certain stage of development in order to promote domestic
industry.  To that effect, his delegation had proposed to have some kind of objective criteria.  He
suggested that Members engage in more substantive discussions on the four tirets and requested
Members which had specific questions for India to submit them in writing.
31. The representative of the United States recalled that the discussion was about existing TRIMs
provisions, which Members had already taken advantag e of, and that there were also other provisions
available, such as Article IX of the WTO Agreement concerning derogations.  She appreciated some
of the comments made by delegations that the implementation proposals were not intended to
undermine the decisions taken in July the previous year.  However, responding to a point made byBrazil, she said that the proposals dealt with ma intaining TRIMs, while the decisions taken in July
dealt with eliminating TRIMs, so there was a direct link between the two.  She considered that the last
intervention by India was quite useful.  If the idea was that once the TRIMs were eliminated pursuant
to the July decisions – which Members recognized were still valid – there might be certain special
circumstances where a developing country would require the use of TRIMs as a development tool,and if such use would not adversely affect the balance of rights and obligations of Members, including
of developing countries, then her delegation was interested in having a further discussion on this.  In
this regard, her delegation looked forward to India's ideas on certain objective criteria.
32. Referring to the Doha Declaration, she said that nowhere in paragraph 12 had Members
accepted the outstanding proposals.  Members were required to examine these proposals and to findG/TRIMS/M/14
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some solutions, but that did not mean that Members had to accept all of them.  The U.S. could not
accept such an interpretation of the mandate.  She noted that some Members, not only the developed
countries, had serious concerns with a number of proposals in JOB(01)/152/Rev.1.  She doubted that
all the proposals would be resolved in a manner that would be satisfactory to the proponents.  She had
instructions from her capital to ask the proponents a number of questions.  One was why the existingrules did not satisfy the ability of Members to get de rogations such as waivers.  On the issue of new
notifications, she observed that for countries that were currently not complying with the TRIMs
Agreement, there was always the ability the use the waiver process.  In any event, there were a
number of developing and developed countries that had eliminated TRIMs, and her delegation was
concerned about proposals that would reverse this course.  Referring to Brazil's question concerning
the existence of the TRIMs Agreement, she recalled that one of the components involved in the
negotiation of the Agreement was to give developi ng countries some cover to implement TRIMs, so
that they would not have to be concerned about seeking a waiver or about being brought to dispute
settlement for violations of Articles III and XI of the GATT.  To that effect, certain transition periods
were built into the Agreement.  Members could have done without the TRIMs Agreement and kept
only Articles III and IX.  If such had been the case, she wondered whether Members would be having
the present debate under the rubric of implementation, or whether what they were really engaged inwas a renegotiation, not necessarily of the TRIMs Agreement but of Articles III and XI of GATT.
33. The representative of Switzerland, recalling that investment issues were also being dealt with
in another WTO body, said that any progress on these issues in the TRIMs Committee would be
particularly welcome.  Referring to tiret 37, he said that this proposal suggested that there were
currently a number of TRIMs that had not been notified, in other words, there was a "grey area".  Itwas important that these measures be notified and dealt with on the basis of their substance, which
under the current rules could only be done through waivers.  With respect to tiret 40, his delegation
was looking forward to Brazil's forthcoming submissi on, but considered that the development policies
referred to in the proposal were extremely broad.  In this regard, he believed that the proposals should
be more focussed in order for Members to discuss them.  He also warned against the permanent natureof such measures because the longer they lasted, the more difficult it became to remove them, unless
the enterprises concerned by these measures had by then become more competitive at the international
level.  He believed that the analysis of developmen t policies should incorporate the fact that the clear
objective was to ultimately remove the TRIMs.  If a country wanted to remove these measures, it
could do so in sectors where it was likely to be competitive and so reduce its dependence with regard
to the investing company, which should then be in a position to find outlets.  In other words, other
outlets and a sufficient level of international competitiveness would make it possible to removeTRIMs.
34. He agreed with India's comment that the deve lopment process was a very long one.  However,
it was important for the process to be conducted in such a way that development could occur not only
in the short-term, but also in the medium- and long-term.  This implied a certain level of
competitiveness and efficiency.  On Brazil's comment concerning the question as to how TRIMsaffected other Members, he pointed out that, to the extent that a new investment was made and that
local content requirements were imposed, foreign enterprises having a stake in exporting to the
country concerned would lose trade opportunities.  However, these effects were difficult to assess
because there was no assurance that such opportunities would have existed in the first place.
35. The representative of Cuba supported the comments made by Brazil and India concerning the
need to redress current imbalances of the TRIMs Agreement.  In her delegation's view, the argument
that the existing rules provided enough flexibility for developing countries to pursue their
development policies was not in line with the longstanding demands from developing countries with
respect to these and other development issues.  She drew the Committee's attention to the substantive
debate on the "development dimension" which had recently taken place in the Working Group on theRelationship between Trade and Investment, where se veral developing countries, including her own,G/TRIMS/M/14
Page 11
had reiterated their concerns with respect to some of the issues being discussed in the TRIMs
Committee.
36. The representative of Australia said she had a number of questions concerning the proposals
under discussion.  First, which TRIMs remained to be notified or which countries had TRIMs that
they would like to notify?  Second, were there any specific proposals on how Article 5.3 of theTRIMs Agreement should be amended?  Third, was the proposal for tiret 39 consistent with Article III
of the GATT?  Fourth, how did the tiret 40 proposal add to existing WTO rights?  Her delegation
looked forward to responses to these questions from the proponents.
37. The Committee took note of the statements made and agreed
 to revert to this item at its next
meeting, scheduled for 14 October.  It was also agreed that the Chairman would convene an informal
meeting before that date to discuss any new submissions.  The Chairman urged delegations that had
expressed their intention to submit proposals to do so as soon as possible.
C. PREPARATIONS IN CONNECTION WITH PARAGRAPH 18 OF THE PROTOCOL OF ACCESSION OF
THE PEOPLE 'S REPUBLIC OF CHINA TO THE WORLD TRADE ORGANIZATION
38. The Chairman recalled that under Paragraph 18 of China's Protocol of Accession, the TRIMs
Committee was required to review, as appropriate to its mandate, the implementation by China of the
WTO Agreement and the related provisions of the Protocol.  The review was to take place within oneyear of China's accession on the basis of the relevant information to be provided by China, as
specified in Sections 3 and 8 of Annex 1A of the Protocol.  The TRIMs Committee was required to
report the results of its review to the Council for Trade in Goods, which should in turn report to the
General Council by the end of the year.  In order to fulfill this requirement in a timely manner, it
would be necessary for the TRIMs Committee to agr ee on its report to the CTG no later than at its
October meeting.  He recalled that at its last meeting the Committee had agreed that the Chairman
would hold informal consultations with the parties involved on how best to proceed with the review
so that the Committee could carry out its task.  On the basis of the contacts he had made on this
matter, he proposed that more time be allowed for the parties involved to continue their consultations
and that, as soon as any new developments emerged, he would convene an open-ended informalmeeting in order to keep Members informed a nd give them an opportunity to comment on the
outcome of the consultations.
39. The representative of China said he doubted whether the TRIMs Committee was required to
"adopt" a report at its October meeting.  He was not sure what were the intention and the implications
of the word "adopt".  According to China's understanding, a report meant the minutes of the meeting
of the TRIMs Committee.  If a report were to be adopted, there would likely be a process of
negotiation and that would not be acceptable to China.
40. The representative of the United States said  that given that the TRIMs Committee's final
meeting of the year was scheduled for 14 October and the fact that its report had to be factored into
the report of the Council for Trade in Goods, in order to facilitate the review China would need to
provide the relevant information soon so that it could be translated and circulated to Members well in
advance of the meeting.  Members would also need to provide China with their questions very soon sothat China would have adequate opportunity to answ er them in advance and to allow for translation
and circulation of the answers as well.  If the Committee was to conduct a meaningful review at its
October meeting, it was not appropriate for it to put off any longer the establishment of some kind of
parameters.  She requested the Chairman to continue consultations with China and other Members on
this matter as soon as possible.G/TRIMS/M/14
Page 12
41. The representative of China took note of the statement made by the United States, which he
considered to be only a proposal.  He said that anything that went beyond paragraph 18 of the
Protocol of Accessi on would not be acceptable to China.
42. The representative of the European Communities sa id that this was a horizontal issue.  There
were other WTO committees currently taking up this matter and they would certainly find a formula
that could guide the TRIMs Committee in its future  work.  His delegation was expecting a meaningful
debate at the October meeting and he called on all delegations to prepare adequately for that occasion.
He announced that his delegation would provide some questions to China in the near future.  The EC
was seeking a pragmatic and orderly process which would allow for timely responses.
43. The Chairman proposed to continue informal consultations on this issue and, if necessary, to
revert to it in an informal meeting before October.  With respect to China's observation concerning the
adoption of the report, he quoted paragraph 18 of the Protocol of Accession, which required theCommittee to prepare a  report.  He agreed with the EC that this was a horizontal issue and that the
TRIMs Committee should take account of that fact.
44. The representative of the United States said that while her delegation agreed that this was a
horizontal issue, there were some specific elements that needed to be taken up in the TRIMs
Committee.  She hoped that in his consultations the Chairman could also deal with those elements,without prejudice to any other consultations that might take place at a horizontal level.
45. The Committee took note of the statements made and agreed
 to the Chairman's proposal on
how to proceed on this issue.
D. OTHER BUSINESS
46. No comments were made.
Date of the next meeting
47. The Committee agreed to hold its next meeting on 14 October 2002.
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