RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/193
22 March 2000
(00-1176)
Council for Trade in Goods Original:  English
QUESTIONS FROM THE EUROPEAN COMMUNITIES REGARDING
THE ARGENTINEAN REQUEST PURSUANT TO ARTICLE 5.3
ON THE AGREEMENT ON TRIMS
The following communication, dated 16 March 2000, has been received from the Permanent
Mission of the European Commission.
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EC Questions
1. We understand from your 1995/97 notifications that the TRIMs in force presently imply both
local content requirements and trade balancing requirements (export performance requirements). Is
this correct?
a) If so, please outline the main feature of the existing regime (level of local content and
level of export requirements, basis for calculations etc.)
b) If not, please outline the differences between our perception of the regime and the
actual measures in force.
2. The GOA notified in 1997 changes to the TRIMs in question.  What caused the GOA to
modify the regime? Were the new measures in conformity with Art. 5.4 of the TRIMs agreement,
which forbids any « increase of the degree inconsistency » of the previously notified TRIMs?
3. We understand that economic operators fulfilling the trade-balancing requirement benefit
from preferential tariff treatment on the importation of input for production and also certain categories
of vehicles.
4. Can you quantify the total value of these benefits? In other words, can the impact of the
TRIMS measures be clearly quantified?
a) Can you please explain how these benefits are distributed?
b) Please also provide import figures of imports of vehicles and vehicle parts that benefit
from concessional tariff rates and imports at MFN rates.
5. Is there an advantage derived from compliance with the local content requirement?
a) Or, conversely, is fulfilling the local content requirement a necessary condition for
economic operators to be able produce and/or assemble in Argentina?
b) Or, alternatively, are economic operators subject to penalties in case of non-
compliance with the requirements? If so, how are penalties calculated?  What has
been the total amount of penalties paid annually in the period 1995-99?
6. Why do you consider that the TRIMs have been effective in developing Argentina’sautomotive industry?  (In your request for extension you describe in some detail the evolution of theG/C/W/193
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sector in Argentina, also against external factors like world/regional economic cycles, the Mexican
crisis and the devaluation of Brazilian real.  Howeve r, the preliminary inform ation submitted by the
GOA does not provide sufficient evidence/elements to uphold the view that the application of the
existing TRIMs has positively affected the development of the Argentina automotive industry.)
7. What has been, according to the GOA, the effect on Foreign Direct Investment  (FDI) in the
automotive sector?  Do you consider that the existing TRIMs have attracted or rather discouraged
inflows of FDI?
a) Can you provide a breakdown of FDI by country of origin in the automotive sector
for the period 1991-1994 and for the period 1995-1999?
8. Please provide an evaluation of the direct impact of the TRIMs on employment in the sector.
9. What would the effect on employment be should the WTO reject the requested extension?10. What measures had the GOA undertaken, in the periods 1995-1999, to prepare for the
elimination of the TRIMs? Please explain in detail (legislative process, industrial policy elements,
consultations with industry etc.)
a) When did the GOA realise that it would be unable to meet the deadline of 31
December 1999 to phase out the TRIMs?
11. Why did the GOA wait until 28 December 1999 to notify its requests for extension?12. Why did the GOA request an extension for 7 years, until 31 December 2006? How did the
GOA arrive at the conclusion that such period of extension was needed?
13. When would the GOA be prepared to circulate information on the domestic process leading to
the elimination of the TRIMs, both from the legisl ative and from the industrial policy point of view?
14. We understand that negotiations are underway amongst the MERCOSUR partners to establish
a Common Automotive Policy.
a) Please describe in detail the state of play of these negotiations and the main features
of the expected final regime.
b) When do you reasonably expect these negotiations to be completed?
c) What is the link between the postponement of the conclusion so these negotiators an
the request for extension of the TRIMs?
d) What if negotiations are concluded shortly? Would this shave an effect on the need
for/duration of extension of TRIMs in questions?
e) What if the extension is not granted? Would this have an effect on the negotiations
with Mercosur partners?
d) To what extent does Argentina currently calculate imports from other Mercosur
countries as being "local content"? How will these issues develop in the coming
years?G/C/W/193
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Data  requested:
- imports/exports per country (including breakdown between extra Mercosur imports at
concessional rates and extra Mercosur imports at MFN rates)
- FDI per country of origin.
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