RESTRICTEDWORLD TRADE
ORGANIZATIONG/TRIMS/W/29
28 October 2002
(02-5900)
Committee on Trade-Related Investment Measures
WORK ON IMPLEMENTATION ISSUES IN ACCORDANCE WITH
PARAGRAPH 12(B) OF THE DOHA DECLARATION
Draft Report to the Council for Trade in Goods
1. The Council for Trade in Goods (CTG) agreed on 7 May 2002 to assign to the TRIMs
Committee the responsibility for conducting work on the outstanding implementation issues related to
the TRIMs Agreement as contained in tirets 37-40 of JOB(01)/152/Rev.1, and for reporting through
its Chairman regularly to the CTG on its progress.1  The TRIMs Committee met four times to discuss
the four tirets.2  In the course of the discussions, references were made to a joint WTO/UNCTAD
background study prepared for the CTG on “Tra de-Related Investment Measures and Other
Performance Requirements”.3
2. With regard to the exercise as a whole, one vi ew was that the proposals contained in tirets 37-
40 would involve the re-negotiation of the TRIMs Agreement and were not a matter ofimplementation.  Another view was that all proposals under Paragraph 12(b) of the Doha Ministerial
Declaration were matters for negotiation within a given timeframe, as an integral part of the Doha
work programme.
3. One view was that the discussion on these tirets has been exhaustive.  Another view was that
further discussion was warranted.
Tiret 37:  Developing countries shall have an other opportunity to notify existing TRIMs
measures which they would be then allowed to maintain till the end of the new transition period
4. One view was that the TRIMs Agreement and its illustrative list were so complex that most
developing and least-developed country Members had no clear idea of what measures they were
required to notify, and so had missed the 90-day deadline under Article 5.1 of the TRIMs Agreement
to make their notifications of inconsistent measures and qualify for transition periods to eliminatethem.  Also, the transition periods provided for in the TRIMs Agreement were too short.  Therefore,
all developing-country Members should be given another opportunity to notify TRIMs and to
maintain them for as long as their development needs required.  It was suggested that increased
transition periods be allowed, with "sunset" clauses linked to some kind of objective criteria such as
level of per capita  income.
5. Another view was that developing-country Me mbers that wished to continue applying
TRIMs, or to institute new ones, should us e the WTO Article IX waiver provisions.
                                                     
1 G/C/M/60, paragraph 6.1.
2 Reports on these meetings are contained in G/TRIMS/M/13, M/14, M/15, and M/15/Add.1.
3 G/C/307/Add.1.G/TRIMS/W/29
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Tiret 38:  The provisions of Article 5.3 mu st be suitably amended and made mandatory
6. One view was that the possibility to extend transition periods under Article 5.3 of the TRIMs
Agreement should remain available to developing-country Members as long as their individual
development, financial and trade needs justified an extension.  Objective criteria, such as level of per
capita  income, could be used to decide on the needs of each Member concerned.
7. Another view was that Article 5.3 was satisfactory as it currently stood, and that there was no
reason to modify it.  Further extensions of the transition periods could be sought through the WTO
Article IX waiver provisions.
Tiret 39:  Developing countries shall be exempted from the disciplines on the application of
domestic content requirements by providing for an  enabling provision in Articles 2 and 4 to this
effect
8. One view was that domestic content requirements were an essential policy tool for
industrialization, particularly at the intermediate stage of a country's development.  Many developed
and newly-industrialized countries had successfully used them during their early stages of
development and had demonstrated the crucial role they could play in the industrialization process,particularly as regards linkage creation.  Recent empirical studies had shown the poor record of value-
added and linkage creation achieved by transnational corporations.
9. Another view was that amending Articles 2 and 4 as suggested would undermine the TRIMs
Agreement’s objective to gradually eliminate TRIMs and could infringe basic GATT principles and
obligations, particularly GATT Article III.  It would alter the balance of rights and obligations in theTRIMs Agreement.  Many developing countries had already made considerable efforts to comply
with its current provisions.  Article 4 provided enough flexibility for developing countries to diverge
from the Article 2 obligations, subject to certain conditions.
Tiret 40:  Specific provisions shall be included in the Agreement to provide developing countries
the necessary flexibility to implement developmen t policies (intended to address, among others,
social, regional, economic, and technological conc erns) that may help reduce the disparities they
face vis-à-vis  developed countries
10. Under this tiret, it was proposed in a written communication by two Members, that
developing countries be allowed to use trade-related investment measures in order to:  (a) promote
domestic manufacturing capabilities in high value-added sectors or technology-intensive sectors;  (b)
stimulate the transfer or indigenous development of technology;  (c) promote domestic competitionand/or correct restrictive business practices;  (d) promote purchases from disadvantaged regions in
order to reduce regional disparities within their territories;  (e) stimulate environment-friendly
methods or products  and contribute to sustainable development;  (f) increase export capacity in cases
where structural current account deficits would cause or threaten to cause a major reduction in
imports;  and (g) promote small- and medium-sized enterprises as they contribute to employmentgeneration.
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11. One view, in support of this proposal, was that  developing countries should be allowed to use
TRIMs flexibly, when, and for as long as, their development process required, and the TRIMs
Agreement should be amended to permit that.  TRIMs and other performance requirements were
valuable tools for countries at an intermediate st age of development to address their developmental
objectives, to pursue industrialization, and to offset the trade-distorting effects of certain forms of
corporate behaviour which could misallocate resources more decisively than investment measures.
                                                     
4 G/TRIMS/W/25.G/TRIMS/W/29
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Studies had shown that developed countries had successfully used these measures to industrialise.
Developing countries were now denied their use, even before they reached the threshold where they
could benefit from them in the case of low-income and least-developed countries.  There was no
conclusive empirical support for the theoretical argument on which the Uruguay Round Agreement to
prohibit TRIMs had been based – i.e., that a priori , TRIMs caused trade-restrictive or distorting
effects.  Other measures used in sectors of particular trade interest to developing countries, like
agriculture, had revealed themselves to have much more distorting trade effects than TRIMs, yet these
measures had not been banned.  TRIMs should be sanctioned only to the extent that they had
trade-restrictive or distorting effects, on a case-by-case basis.  Otherwise, developing countries should
have the discretion to decide for themselves whether to use TRIMs for their development purposes.
12. Furthermore, the TRIMs Agreement had established uniform obligations for all Members,
failing to take account of structural inequalities among them and disparities in levels of development,technological capabilities, or social, regional and environmental conditions, and failing to incorporate
a meaningful development dimension.  Aside from transitional periods, it did not provide any S&D
treatment that would allow developing countries to address their specific economic, financial and
social concerns.  Moreover, the transition periods to eliminate TRIMs had not been long enough to
allow developing countries to overcome their structural problems, to enter a path of sustainablegrowth, or to catch up with developed countries.  Article 4 of the TRIMs Agreement did not address
the specific concerns of developing countries, and was thus insufficient.
13. Another view was that TRIMs had proven, distorting effects on trade, investment, and
resource allocation, which was why many Members had abandoned their use.  Other measures were
available to address the kinds of objectives that were sought through the use of TRIMs, for examplecompetition law and policy in the case of correcting abusive corporate behaviour.  The TRIMs
Agreement already provided enough flexibility to accommodate developing countries’ concerns.  The
Agreement was itself an S&D provision, since it provided developing countries with transition
periods to eliminate measures that were already inconsistent with GATT Articles III and XI.  It
provided also the possibility of extending those transition periods, and this had already been usedsuccessfully by a number of Members.  Article 4 of the TRIMs Agreement also provided flexibility to
developing countries to use TRIMs in specific circumstances, and additional flexibility could be
sought through the WTO Article IX waiver provisions.  The proposal raised concern because it would
alter the balance of rights and obligations of the TRIMs Agreement, and would undermine the
decisions taken by the Council for Trade in Goods to extend the transition period for certain
developing-country Members.
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