RESTRICTEDWORLD TRADE
ORGANIZATIONG/TRIMS/M/13
6 June 2002
(02-3136)
Committee on Trade-Related Investment Measures
MINUTES OF THE MEETING HELD ON 21 MAY 2002
Note by the Secretariat
1. The Committee on Trade-Related Investment Measures met on 21 May 2002 under the
Chairmanship of Mr. Paul Bennett (Ireland).  The Committee adopted the agenda contained in
WTO/AIR/1792/Rev.1.
A. N OTIFICATIONS UNDER ARTICLE 6.2 OF THE TRIMS AGREEMENT
2. The Chairman said that notifications submitted under Article 6.2 were listed in document
G/TRIMS/N/2/Rev.9.  Lithuania, Gabon and Georgia had recently submitted notifications (contained
in G/TRIMS/N/2/Rev.9/Add 1, 2 and 3, respectivel y).  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 submitnotifications as soon as possible.
3. The Committee agreed to revert to this item at its next meeting.
B. OUTSTANDING IMPLEMENTATION ISSUES – AGREEMENT ON TRADE -RELATED INVESTMENT 
MEASURES
4. The Chairman recalled the decision of the Council for Trade in Goods (CTG) taken at its
resumed meeting on 7 May 2002, whereby it assigned to the TRIMs Committee the responsibility for
conducting work on the outstanding implementation issues contained in tirets 37 to 40 of document
JOB(01)/152/Rev.1 and for reporting regularly to the CTG on progress on this issue.  He suggested
that the best way to fulfill the Committee's reporting obligation would be for the Chairman of the
TRIMs Committee, after each meeting of the Committee at which the issue was discussed, to make a
brief oral report to the CTG and to draw its attention to relevant sections of the minutes of the TRIMs
Committee meetings.  He then invited Members' comments, both on his procedural suggestion and onthe substance of tirets 37 to 40.
5. The representative of India opened with some general remarks on TRIMs implementation
issues, saying he would comment further on each tiret at a later stage in the meeting.  He said that the
TRIMs Agreement was one of the Uruguay Round agreements that had taken away the most
flexibility from developing countries in terms of their developmental strategies.  It denied developingcountries the opportunity to use certain performance requirements, especially those related to local
content.  The Article 5.1 notifications submitted by Members showed that no developed country had
notified any TRIM and only one least-developed country (LDC) had done so.  The same was true
among other developing countries with relatively low per capita income or whose level of
industrialization was less advanced.  This reflected the fact that TRIMs and other performancerequirements were suitable for use by countries only when they reached a certain stage of
development.  As brought out in various UNCT AD documents, especially the World Investment
Report 2001, and also in the recent joint study by the WTO and UNCTAD Secretariats (G/C/W/307
and Add.1), the developed countries had used these measures over long periods when they were at
less advanced stages of development, and continued to use them even after their industries were wellG/TRIMS/M/13
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established.  Imposing five and seven-year transition periods to eliminate the measures, for
developing countries and LDCs respectively, ther efore was unsuitable.  LDCs and many low-income
countries were being denied the use of the measures as development policy tools even before certain
sectors of their economies had reached the threshold from which they might benefit from using
TRIMs.  It was in this context that implementa tion issues related to the TRIMs Agreement had been
raised by some developing countries prior to the Seattle Ministerial Conference.  India had raised the
issue in its submission WT/GC/W/203.  Members had subsequently received a clear mandate from
Ministers at Doha, who had agreed that negotiatio ns on outstanding implementation issues were to be
an integral part of the Doha work programme, and he quoted paragraph 12 (b) of the Doha Ministerial
Declaration in this respect.
6. Referring to tiret 40, the representative of Colombia said that during the process of
preparation for the Seattle Ministerial Conference, Colombia had presented two TRIMs proposals
stating that developing countries should be exempt from the application of multilateral disciplines
which stopped them from using industrial policies based on local content requirements.  This
responded to the difficult situation that developing countries faced regarding unemployment, and their
need to apply policies that would enable them to foster and increase value-added in their exports.
Colombia favoured modification of the TRIMs Agreement to create more flexibility and room formanoeuvre for developing countries.  In her delegation's view, Article 9 of the TRIMs Agreement
identified three types of policies that could create trade distortions.  These were TRIMs, investment
policies , and competition policies.  The Uruguay Round had dealt only with TRIMs and had restricted
further the limited policy flexibility of developing countries.  The other two policy areas had not been
the object of negotiations.  She reiterated that it was extremely important to broaden the room formanoeuvre of developing countries through a modification of the Agreement which would enable the
application of policies aimed at fostering the incorporation of domestically produced goods.  Her
delegation was particularly interested in Brazil's proposal to establish criteria which might be applied
to determine TRIMs whose use would be permitted for developing countries, such as those aimed at
promoting regional development.
7. The representative of Brazil explained his delegation's proposal in tiret 40.  In Brazil's view,
the TRIMs Agreement had established equal obligations for all Members, regardless of the disparities
between them in levels of development.  India had also made this point.  The only exceptions were a
few transitional provisions, but there were not really any clauses for special and differential treatment
in the Agreement that would allow developing coun tries to address their specific needs regarding
economic, financial and social policies.  The disciplines of the TRIMs Agreement did not take
account of obvious structural inequalities among Members, which could not have been overcomewithin the five-year transition period.  This was illustrated by the fact that a number of Members had
requested an extension of the transition periods to eliminate their TRIMs, which had been granted
until end-2003.  Solutions to these countries' problems would require long-lasting policies and
adequate financing for their execution, but the implementation of development policies was usually
constrained by lack of public funds from either domestic or foreign sources.  It was sometimes arguedthat private sector investment could cover this shortcoming, but for the most part these had proved to
be highly volatile and closely linked to the vagaries international financial markets.
8. Apart from the fundamental need of developing countries to attract investment in order to
maintain adequate economic growth and to improve social conditions, he emphasized that other
important fiscal and monetary factors came into play.  The high volatility of international capitalflows, for example, aggravated balance-of-payments di fficulties that were inherent at the early stages
of developing productive investment.  When im port spending largely outstripped export revenues,
trade liberalization undertakings that ensued from multilateral negotiations usually set off an
investment cycle that required special care in sensitive areas such as employment reallocation,
currency stability and fiscal equilibrium.  In his delegation's view, all these elements made it clear thatdeveloping countries required flexibility when making use of TRIMs.  He agreed with Colombia that
developing countries should be allowed flexibility to devise policies that could attenuate the negativeG/TRIMS/M/13
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effects of investment cycles, create a hospitable environment for foreign and domestic investors alike,
promote social and economic development, and address the problem of regional poverty.
9. As a result, it was fair and necessary to review the factors that had led to the acceptance of
horizontal and uniform TRIMs disciplines by WTO Members, without due consideration to the
individual needs of developing countries.  In th e Uruguay Round, these factors seemed to have had a
higher face-value than today.  In his delegation's view, the WTO/UNCTAD joint study showed that
TRIMs had been important policy tools for developed countries in their early stages of economic
development.  It also showed that the use of TRIMs by developing countries in the context of their
industrial policies had been successful, taking into account the particular macroeconomic and other
characteristics of individual countries.  A number of recent studies had questioned the factors that had
led to the adoption of horizontal obligations in the TRIMs Agreement in the Uruguay Round, as had
been noted by India at the CTG meeting of 2 May.
10. These were the basic elements of Brazil's approach to this issue in the context of
implementation.  His delegation was interested in having a fruitful, constructive and honest discussion
of these concepts in light of Brazil's proposal to review certain provisions of the TRIMs Agreement in
order to provide developing countries with the necessary flexibility to implement development
policies intended to address, among other things, social, regional, economic and technologicalconcerns, and aimed at reducing the disparities that these countries faced vis-à-vis  developed
countries.
11. The representative of Argentina agreed with Colombia and Brazil that recent studies had
shown, at least in most of the cases analysed, that there had not been important trade distortions
resulting from the application of TRIMs, although there could be an effect on national resourceallocation.  In his view, tiret 40 was important because there was a need to re-evaluate whether it was
possible, convenient and necessary to give more margin to developing countries to apply TRIMs that
had important industrial and developmental policy effects, but that had insignificant trade effects.
Argentina, for example, had a TRIM in the automobile sector which had played, and continued to
play, a very important role in Argentina's industrial policy, but which had no adverse effect on anyother Member country's trade.
12. The representative of Mexico said that tiret 40, like other tirets, was of great importance to his
delegation when discussing questions of implementation.  It believed concrete proposals were needed,
the context and scope of which it would examine carefully.  He understood that Colombia and Brazil
had put forward proposals before Doha, and woul d now like to see them tabled in the TRIMs
Committee so that his delegation could study and analyze them in this new context.  This was an
important issue and his delegation's objective was to ensure that the spirit and the delicate balancebetween rights and obligations of the TRIMs Agreement be fully respected in any discussions.  This
should be the parameter in order to be able to discuss proposals addressing development aspects.
13. The representative of the United States sa id that her delegation recognized the mandate
contained in paragraph 12 of the Doha Declarat ion, but took issue with the assumption that the
mandate prejudged in any manner how the proposals were to be dealt with in the Committee or in itsreport to the Trade Negotiations Committee.  In her delegation's view, the substance and content of
the proposals had been taken up in July last year, when the requests for extensions had been decided
on favourably.  If the current proposals were taken on board they would undermine those decisions.
Her delegation's position on the proposals had not changed from the time they were originally
introduced, nor was it willing to do anything that might undermine the basis on which extensions tothe transition periods had been granted last year.  With respect to the Article 9 review and the
WTO/UNCTAD joint study, she recalled her delegation's remarks in the CTG.  She noted that the
study had recognized that there were some data deficiencies, and said that this study was only one
input to the Article 9 review;  perhaps there would be others.  Her delegation considered the TRIMs
Agreement itself was a means of addressing developing countries' concerns with respect to measuresG/TRIMS/M/13
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which were already inconsistent with Articles III and XI of GATT, by providing for the extension of
transition periods to eliminate the measures.  Any proposals to further extenuate the process that
Members had already undergone to achieve the elimination of TRIMs that were inconsistent with the
GATT would cause her delegation great concern.
14. The representative of the European Communities noted that implementation issues had been
under discussion for some time, without leading to agreement among Members.  The E.U.'s position
was well known.  It was sceptical about the proposals since it believed they would entail renegotiation
of the TRIMs Agreement.  This was not, therefore, an implementation issue, but rather a question of
negotiation.  It seemed to his delegation that if Members wanted to work constructively on these
issues, in light of the Doha Ministerial mandate, they should become more substantive.  He agreed
with Mexico that the Committee could much better discuss the matter on the basis of concrete written
proposals, as was being done in other WTO Committees.  The proposals should describe whatchanges were to be made, the reasons for the changes, and what the effects of the changes would be.
The current proposals, as contained in the relevant tirets, were all very general.  It appeared to him
that if they were to be implemented, the TRIMs Agreement would become plurilateral because all that
would be left would be obligations for developed count ries.  He did not believe that this was the right
direction to take.
15. The representative of Brazil said the E.U's last comment reminded him of item k of Annex I
of the Agreement on Subsidies and Countervailing Measures, which he considered to be one of the
biggest aberrations resulting from the Uruguay Round, and which created a sort of plurilateral
agreement to the extent that it gave special and differential treatment not to developing countries but
to developed countries.  He went on to clarify Brazil's position on TRIMs implementation issues.First, Brazil had no intention of reopening discussi on on the extensions to transition periods granted
last.  Second, his delegation had said in many WTO meetings since Doha that the implementation
issues in paragraphs 12(a) and 12(b) of the Doha Ministerial Declaration were both part of the single
undertaking;  he wanted to make this clear in the TRIMs Committee too.  The Committee was
therefore discussing outstanding TRIMs implementation issues on the basis of a negotiating mandate.For those delegations that felt otherwise, he poin ted out that their argument that paragraph 12, in
particular 12(b), did not involve negotiations could also apply to the Singapore issues.  However, his
delegation wanted to avoid this kind of linkage and to engage in an honest discussion in the TRIMs
Committee under a mandate that, in his view, was very clear.  Regarding the comment by the
United States about data deficiencies encountered in preparing the WTO/UNCTAD joint study, he
noted this could lead to both underestimating and overestimating the trade-distortive effects of TRIMs
and their effects on resource allocation.  His delegation had taken note of the U.S. comment, made inthe context of the Article 9 review of the TRIMs Agreement in the CTG, that TRIMs affected
negatively the efficient allocation of resources.  He did not believe there was definitive evidence in
this regard, but his question to the United States was what effect it believed the granting
US$170 billion in subsidies to farmers would have on the efficient allocation of resources?  He had
taken note of the requests from the European Communities and Mexico for written proposals to betabled on TRIMs implementation issues;  his delegation would try to oblige in time for the
Committee's next meeting.
16. The representative of India welcomed the remarks by Brazil, Colombia and Argentina
highlighting the need of developing countries for flexibility to implement their development policies.
He also took note of the comments made by United States, Mexico and the European Communitiesregarding Committee's present exercise, and said his delegation shared Brazil's views on the nature of
the mandate under paragraph 12 of the Doha Ministerial Declaration.  In this regard, his delegation
saw no linkage between the extension of transition periods and the current discussion on TRIMs
implementation issues.  It was true that there had been previous discussion of the implementation
issues, but this had not led to a satisfactory outcome.  His delegation would try to elaborate on andclarify its proposal so that the Committee could have a meaningful and constructive dialogue.G/TRIMS/M/13
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17. Referring to tiret 37, he said that Article 5.1 of the TRIMs Agreement had given Members a
limited period of 90 days to notify TRIMs inconsistent with the provisions of the Agreement.  The
Agreement and its illustrative list was so complex that it was natural that most developing countries
and LDCs had not had a clear idea of which measures were to be notified, and had missed the
deadline.  Even WTO panels had found it difficult to decide on the consistency or otherwise of certainmeasures with the provisions of the TRIMs Agreement.  The Agreement had emerged very late in the
Uruguay Round negotiations, and developing countries and LDCs had not had sufficient time to
examine various measures existing at that time.  Some, as a matter of precaution, had even notified
measures that were in fact consistent with the Agreement.  It was clear that developing countries and
LDCs should be provided with another opportunity to notify TRIMs, both those in place now but not
notified and new measures.  Transition periods of five years or seven years, even with possible
extensions, assumed that the distance between developed and developing countries was only thatlimited.  In the situation where disparities of income, technological capability, and so on, between
developed and developing countries were increasing, transition periods did not help.  With a view to
ensuring that TRIMs could be maintained by developing countries for as long as their development
process required, longer transition periods with "sunset" clauses linked to objective criteria such as
per capita income were needed.
18. The extension of transition periods should be retrospective, in view of the principle of equity.
Some Members had eliminated measures based on their legalistic reading of the provisions related to
transition periods ending for developing countries at end-1999.  Some had eliminated certain
measures in their eagerness to take the reform process forward.  However, the elimination of these
measures had started telling on the industrial value-added of these countries, as brought out inUNCTAD's Trade and Development Report 2002.  These Members should, therefore, be given the
opportunity to re-introduce the measures, and to continue to use them until they reached a specific
level of development.  If the measures were not considered to be development- friendly, countries
would decide against using them on their own.  Howe ver, the fact that many developed countries and
the newly industrialized countries had resorted to TRIMs and other performance requirements duringtheir industrialization processes and had succeeded in industrializing themselves pointed to the crucial
role such measures could play.  It was true that the measures could lead to economic inefficiency if
used indefinitely and indiscriminately, but that was a matter for each Member to decide on for itself.
19. It had been planned that the Article 9 review of the TRIMs Agreement would have been
completed before the end of the transition period available to developing countries;  not later than five
years after the date of entry into force of the WTO Agreement (i.e., by 31 December 1999) the review
of the Agreement was to have been completed, and amendments arising out of the review were tohave been placed before the Ministerial Confer ence for decision.  Following international law and
practice, as long as any amendments proposed remained under consideration by the decision-making
body, "sunset" clauses would not apply.  However, seven-and-a-half years after the entry into force of
the WTO Agreement, the Article 9 review process had not begun in earnest.  Developing countries
therefore had no other choice but to raise the issues under implementation.
20. Referring to tiret 38, he noted that although the CTG had adopted a two-plus-two years
formula for extensions of the transition period, it had to be recognized that the provisions of
Article 5.3 were available at any time, unless they were amended or modified through due process,
and as long as individual development, financial or trade needs of the concerned Member justified an
extension.  Objective criteria were necessary for deciding on the individual development, financialand trade needs of countries.  In the absence of objective criteria it was very likely that such
extensions might be agreed to by other Members subject to quid pro quo  arrangements, which would
be against the letter and spirit of the provisions of the Agreement.  There were criteria, such as per
capita income or similar parameters, which could be used for deciding on the individual development,
financial and trade needs of individual Members.   The Agreement on Subsidies and Countervailing
Measures gave guidance on this matter.G/TRIMS/M/13
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21. With reference to tiret 39, he noted that each country passed through different stages of
development, and at each stage different development policy tools were required.  Domestic content
requirements were an essential policy tool for building domestic industry.  This was particularly so
during the intermediate stage of development.   The UNCTAD World Investment Report 2001 had
underlined the role played by domestic content requirements in creating linkages, an essentialrequirement for industrialization.  The WTO/UNCTAD joint study also gave a comprehensive picture
of the extent to which domestic content requirements were utilised by developed countries for periods
ranging from 50 to 80 years.  Since these countries had now reached a certain stage of economic
development, they might not require the measures any more.  However developing countries,
especially those at low per capita income levels, and LDCs were being denied the opportunity to use
these important development tools.
22. On tiret 40, Brazil, Colombia and Argentina had highlighted the importance of flexibility for
developing countries, particularly when the disparities in income, technological capabilities and other
economic and social indicators between developed a nd developing countries were widening.  It was
important that flexibility should be available to developing countries based on their specific
developmental, financial and trade needs.  His delegation, therefore, submitted the following proposal
for consideration: "Each WTO Member shall have th e right to maintain any prohibited TRIMs as long
as their per capita income is below a certain threshold figure or based on certain other criteria".  His
delegation looked forward to meaningful and constructive dialogue on the clarifications made and the
proposal he had put forward.
23. The representative of the Philippines, said that his country was one of those which had, under
threat of dispute settlement, agreed to  phase-out its notified TRIMs in the automotive sector four
months ahead of schedule.  He was aware that this issue should not be linked to implementation issues
and surprised to hear the United States suggest that the current debate seemed aimed at putting into
question the extensions to the transition periods that had been granted.  He supported India's specific
proposals, and also the interventions by Brazil, Colombia and Argentina.  Developed country
Members, and especially the Unites States and the European Communities, should give theCommittee the chance to debate fully the specific mandate arising out of Doha in terms of
implementation, and also the chance to bring into the picture the possibility of a broader mandated
review of the whole issue of investment-related measures.  He was very familiar with the impact on
the Philippines' automotive industry of the phase-out of TRIMs:  it was causing unemployment and
moving investments out of the country, and would adversely affect the industrial development
programme because of the many linkages that the au tomotive industry had with other sectors.  This
would have regional implications, which would be exacerbated if three other ASEAN countries were
not able to use TRIMs either.  Given time, the Philippines could certainly come up with the detailed
proposal that the European Communities had asked for.  His delegation was encouraged by the E.U.
view that the Committee should look at specific issues, but not by that of the U.S. that discussions
were finished and that the issue should not be revisited.  At future meetings of the Committee
addressed to implementation issues, the starting-point  should be the need of developing countries for
flexibility for their developmental, structural, economic and other social needs.
24. The representative of Australia said that her delegation recognized the importance of
flexibility to implement economic and industrial development policies in the national interest.  It
believed that current WTO agreements, including the TRIMs Agreement, allowed amply for this.  Its
concern regarding proposals on the table to modify the TRIMs Agreement was that most of thesewould fundamentally alter the Agreement's balance of rights and obligations.  Therefore, she
encouraged the proponents to present compelling arguments to justify their claims in written
proposals.  Tiret 37 had been discussed at length over the past few years, and India had made further
useful comments.  Regarding tiret 38, she believed that Article 5.3 was all right as it stood, as it was
discretionary rather than mandatory and it prov ided for the CTG to take into account Members'
particular problems.  Regarding tiret 39, she feared that amending Articles 2 and 4 as suggested would
undermine the objectives of the Agreement and could infringe on basic GATT principles.  On tiret 40,G/TRIMS/M/13
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she believed that the existing Agreement provided the necessary flexibility to implement development
policies.  TRIMs Article 4, for example, allowed developing countries to deviate temporarily from
national treatment and quantitative restriction obligations, and GATT Article XVIII also provided
special procedures to deal with circumstances where inconsistent measures might be required.
Therefore, she reiterated that her delegation would welcome further written submissions fromproponents that would provide a convincing case for the proposals that had been made.
25. The representative of the United States said that regarding the reference made by Brazil to
U.S. subsidies under the Farm Bill, agricultural negotiations were going on.  She did not agree that
negotiations were underway on paragraph 12(b) implementation issues.  The introduction to
paragraph 12 was clear and so was the mandate for paragraph 12(b).  In her delegation's view, the
TNC would have to take into account whatever reports came to it, and there should not be a
prejudgement of how the TNC would dispose of th ose reports.  Concerning the WTO/UNCTAD joint
study, she suggested that her delegation's full comments be recognized, not just one aspect of them.
Regarding comments by other delegations expressing surprise that the United States was concerned
about undermining the decisions taken the previous year on the extension requests under Article 5.3,
she said that what she had heard from India was a specific proposal that would effectively undermine
those decisions.  At the same time, she took note of the expressions of support for the decisions takenthe previous year and hoped to see them honoured.  She thought the points made by Australia were
pertinent concerning some of the issues raised regarding development and taking into account other
economic needs, especially balance-of-payments.  India had referred to elements of Article 9 of the
TRIMs Agreement, but not the Article's second sentence.  The Article 9 review was taking place in
the CTG, and her delegation was engaged in that debate.  However, it was hard for the United Statesto engage in this discussion on implementation issues when linkages were made to the Article 9
review and to the transition period extensions granted last year.  Her delegation remained to be
convinced that the implementation proposals did not undermine the decisions on transition period
extensions.  Her delegation's interpretation of Article 5.3 differed from that put forward by India.
26. The representative of Mexico said, with regard to tiret 37, that, in principle, Mexico agreed
and supported giving other developing and least developed countries the opportunity to notify
measures which had not yet been notified, as well as discussing conditions for maintaining those
measures up until the end of the new transition period that had been granted.  He asked these
Members to make their notifications as soon as possible, given that the new transition period had
already begun and that it was necessary to discuss the conditions under which extensions would be
granted.  The conditions could not be less than those already authorized.  It should not be forgotten
that the new transition period also brought with it obligations that had to be fulfilled, and otherMembers, including Mexico, had to comply with those obligations.  This was why it was urgent that
the interested parties produce the notifications, so that Article 5:3 of the TRIMs Agreement could be
opened up and complied with in order to have the flexibility contained in tiret 37.
27. With regard to tiret 38, he said that, in principle, the provisions of Article 5 of the TRIMs
Agreement, including paragraph 3, were mandatory.  Proof of that was the process through whichvarious Members had gone in order to obtain the extensions provided for.  Mexico was open to hear
from other Members proposals as to what types of modifications could be made with the objective of
discussing their viability.  Without prejudging the results, his delegation would like to see these
proposals in writing.  With regard to tiret 39, although he understood some of the concerns regarding
the obligations of national treatment and the elimination of quantitative restrictions, this issue had tobe discussed with caution, since that his delegation was not willing to create an imbalance in rights
and obligations that had already been agreed upon, nor between the objective of the Agreement and
mechanisms set out to fulfill it.  By that he m eant that the provisions of the Agreement had been
negotiated and accepted by all, and many developing countries, including his own, had made
considerable efforts in order to comply with its provisions.  They had also used the rights for
flexibility provided for under the Agreement, rights which they would not like to see altered.  The
Committee should not lose sight of the fact that Article 4 already contained some flexibilityG/TRIMS/M/13
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provisions enabling developing countries to diverge from the obligations established in Article 2,
subject to certain conditions.  Finally, he inquired about the relationship between exempting
developing countries from local content requirements and tiret 37, i.e., granting the possibility of
notifying measures which diverge from the Agreement because perhaps they had domestic content in
them. Why would greater flexibility be required in notifying measures, if under the proposal in tiret39 a permanent exemption from the obligations woul d be granted?  His delegation would not be able
to support this.  Also, what was the meaning of th e exemption which had been asked for in relation to
the objective and spirit of the Agreement, to gradua lly eliminate local content requirements in order to
have fair and competitive trade.
28. The representative of Canada supported th e submission of written proposals, which he
believed would help guide future discussions in  the Committee.  While Canada remained unconvinced
of the need to alter the balance of rights and obligations of the TRIMs Agreement, it looked forwardto a fruitful discussion.  In Canada's view, the needs of developing and least-developed countries were
recognized in the TRIMs Agreement through, first, transition periods and, second, through Article 5.3.
In this regard he noted the actions taken the previous year by the CTG.  He also noted, as Australia
and Mexico had mentioned, that the balance-of-payme nts provisions were available through Article 4
of the TRIMs Agreement.  Finally, developing and least-developed countries' needs were alsoacknowledged in the Doha Decision last year.
29. The representative of Japan said that Members had agreed to continue discussions on all the
implementation issues under the Doha Ministerial mandate.  With regard to the proposals as they
stood, he said that Japan remained unconvinced.  Many developing countries argued that industrial
policy was necessary for their development, and he observed that Japan was sometimes cited ashaving had an industrial policy.  While industrial policy had played a certain role, Japanese business
would say that liberalization had been the driving force for streamlining their operational efficiency,
not industrial policy.  It was wrong to view industrial policy a magic tool for industrial development.
In his delegation's view, it was not correct to say that the TRIMs Agreement contained nothing on
special and differential treatment.  As others had mentioned, it provided a certain room for flexibilityfor developing countries.  Japan remained unconvinced that the loopholes under the TRIMs
Agreement should be opened up further.  However it remained open to discussion and was interested
in hearing more about the reasons behind the proposals made.
30. Regarding Members' comments on the balance of rights and obligations in the TRIMs
Agreement, the representative of India believed, as did Brazil, that the balance was perhaps in favour
of developed countries.  What he had been saying was that it was developing countries and LDCs thatrequired flexibility.  Clarifying the proposal put forward by his delegation, he said it was not new butderived from tirets 37 to 40.  The essential element was flexibility and the need for a transition period
whereby developing country Members could reach a particular stage of development.  Some
delegations had mentioned that Article 5.3 was all right as it stood, but he reiterated that the five and
seven years and the two-plus-two formula would not be sufficiently long, so objective criteria were
needed to ascertain the development, financial and trade needs of developing countries.
31. The representative of Venezuela shared Brazil's interpretation of paragraph 12 of the Doha
Ministerial Declaration that all outstanding implementation issues, those in both paragraphs 12(a) and
12(b), were part of the single undertaking and were subject to negotiation.  With regard to Brazil's
proposal in tiret 40, in her view the TRIMs Agreement did contain some provisions that recognized
developing countries, such as the transition periods in Article 5.3.  However, the very difficultnegotiations that had taken place to obtain transition periods showed how important flexibility was for
developing countries and that perhaps the transition period had not been sufficiently long for them to
implement the disciplines.  There were structural elements of flexibility that the Agreement did not
take into account, and which were addressed in Brazil's proposal.  Developing countries had important
social and economic concerns, which were much broader in scope than efficiency criteria, so sheconsidered that Brazil's proposal went in the right direction and supported it.G/TRIMS/M/13
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32. The representative of Cuba thanked India and Brazil for their detailed contributions on the
need to make the Agreement more flexible and supported their proposals.  She noted the concerns
expressed by some Members about discussing matters that could lead to an imbalance in the rights
and obligations of the Agreement.  However, she asked whether development realities would not be a
proper reflection of such an imbalance.  There were clear differences between developed anddeveloping countries;  developing countries had to face problems on their path to development which
had already been overcome by the developed countries.  Therefore, her delegation considered it only
fair to review the Agreement so that there would be an adequate reflection of special and differential
treatment that took into account the problems and needs faced by the developing and least-developed
countries.  Cuba was particularly interested in the continuation of the debate and hoped for due
flexibility from those delegations that still had reservations.
33. The representative of Morocco said that his delegation did not question that the TRIMs
Agreement had provisions on special and differential  treatment, in particular regarding transitional
periods and notifications.  There was, undoubtedly, certain flexibility in the Agreement, but he
considered that reality had to be taken into account.  The transition periods and the extensions had
solved nothing as far as the structure of the Agreement and its implementation by developing
countries was concerned.  Development gaps had been further widened by accelerated globalization,and the transition periods granted did not reflect the reality as regards investments in developing
countries, particularly strategic investments in key sectors of their economy.  For that reason, it was
necessary to examine how to strengthen the flexib ility that already existed in the TRIMs Agreement
and to adapt it taking into account the international investment context.
34. The Chairman recalled the decision of the CTG and the reporting requirements of the TRIMs
Committee.  He noted that no delegation had objected to the procedure he had proposed that the
Chairman of the TRIMs Committee report to the CTG on developments on the discussion on
implementation issues, so he took it that this was acceptable.  Regarding the substantive discussion in
the Committee, he believed there was no disagreement that the Committee's time-frame was
extremely tight with two further meetings set for later in the year, so to make progress on this
particular item would require a structured approach to debate.  There was a clear feeling from the
discussions that, in order to have a structured discussion, the Committee needed to receive detailed
proposals, explanations and reasoning from the proponents of the particular tirets involved.
35. The Committee took note of the statements made and agreed  to report to the CTG as
suggested by the Chairman and to revert to this item at its next meeting, by which time proponents
were invited to submit detailed proposals.
C. SPECIAL AND DIFFERENTIAL TREATMENT :  R EQUEST FROM THE CHAIRMAN OF THE
COMMITTEE ON TRADE AND DEVELOPMENT TO THE CHAIRMAN OF THE TRIM S COMMITTEE
36. The Chairman noted that he had received from the Chairman of the Committee on Trade and
Development (CTD) a letter, dated 10 December 2001, in which he had invited him in his capacity as
Chairman of the TRIMs Committee to inform him of any discussions or other developments relating
to special and differential treatment taking place in the TRIMs Committee between December 2001
and July 2002.  The Chairman of the CTD had also indicated that the CTD would welcome any other
contribution the TRIMs Committee might wish to make in this regard.  He drew Member's attention
to the pertinent extract from the letter of the CTD Chairman reproduced in the meeting's airgram.  In
response to that invitation, he had prepared a draft letter that had been circulated to all Members for
their consideration under the symbol Job No. 3891.  He invited Members' comments on the letter.  Asthere were none, he proposed to forward the letter to the Chairman of the CTD.
37. The Committee so agreed.G/TRIMS/M/13
Page 10
D. OBSERVER STATUS FOR INTERNATIONAL INTERGOVERNMENTAL ORGANIZATIONS
38. The Chairman recalled that the Committee had before it outstanding requests for observer
status from seven international intergovernmental organizations, which were listed in the airgram.  He
added that no new requests had been received since the last meeting.  Noting that consultations on the
issue of observer status for international intergovernmental organizations were currently taking placein the framework of the General Council, he asked if the Committee could agree to defer
consideration of the pending requests until such time as there was an indication from the General
Council on how they might handle the overall issue.
39. The Committee so agreed.
E. PREPARATIONS IN CONNECTION WITH PARAGRAPH 18 OF THE PROTOCOL OF ACCESSION OF 
THE PEOPLE 'S REPUBLIC OF CHINA TO THE WTO – R EQUEST BY THE UNITED STATES
40. The Chairman recalled that under the Transitional Review Mechanism contained in China's
Protocol of Accession, those subsidiary bodies of the WTO, including the TRIMs Committee, which
had a mandate covering China's commitments under the WTO Agreement or the Protocol were
required, within one year of China's accession, to review, as appropriate to their mandate, the
implementation by China of the WTO Agreement and the related provisions of the Protocol.  To that
end, China was to provide relevant information, incl uding information specified in Annex 1A of the
Protocol, to each subsidiary body, including the TRIMs Committee, in advance of the review.
Information specified in Annex 1A that was destined specifically for the TRIMs Committee was
contained in Sections 3 and 8 of that Annex, entitled, respectively, "Investment Regime" and "Trade-
Related Investment Measures".  The TRIMs Committee was required to report the results of its review
to the Council for Trade in Goods,  which should in turn report promptly to the General Council in
order to allow it to conduct its own review before the end of the year.  As the Committee Members
were aware, the TRIMs Committee was scheduled tent atively to meet three times in the year, on the
date of the present meeting and on 10 July and 14 October.  Consequently, in order for the Committee
to carry out the task that had been assigned to it in Paragraph 18:1 of China's Protocol of Accession, it
would be necessary for the Committee to agree on its report to the Council for Trade in Goods no later
than at its October meeting.  This would suggest th e need for China to submit the relevant information
to the Committee sufficiently in advance of that  meeting to allow time for other WTO Members to
consider it.  He then invited the delegation of the United States to take the floor.
41. The representative of the United States said that her delegation had requested the inclusion of
this item on the agenda because of the imminent time-lines to fulfill the requirement of the Protocol
concerning the transitional review mechanism.  Her delegation hoped that the Committee could
proceed with a pragmatic and practical time-line for China to submit the required information and alsoto allow time for questions and for any answers that China would deem appropriate, to complete the
process and to allow the Committee to complete its report.  In that light, her delegation hoped that the
Committee could come up expeditiously with some agreed way of proceeding.
42. The representative of China said that this issue had been discussed in other subsidiary bodies
of the WTO and that China had already established a unified position on this question.  He wished to
repeat that position to the Committee.  As a new Member of the WTO, China took its membership
seriously.  China was willing to fulfill its obligations under Paragraph 18 of the Accession Protocol
and, in that respect, had been making great effort s in preparations for the transitional review.  With
understanding and support from its trading partners, China was determined to do its utmost in trying
to overcome the practical difficulties in this regard.  However, as far as the transitional review wasconcerned, China had no more obligation that what was stipulated in Paragraph 18, and any
suggestion to go beyond that and increase the obligations of China in terms of specific time-frames or
procedures would be firmly rejected.  Since Paragraph 18 had already established important
guidelines on the frequency, procedure, scope and substance of the transitional review, it wasG/TRIMS/M/13
Page 11
inappropriate for any subsidiary body of the WTO to try to re-negotiate or re-define the terms of the
said reviews as provided in Paragraph 18.  As the Chairman had mentioned in his introductory
remarks quoting from Paragraph 18, the subsidiary bodies of the WTO which had a mandate covering
China's commitments could conduct the transitional review once a year.  China was of the view that
such a review might in principle take place at the last regular meeting of each subsidiary bodyconcerned for that year.  Once a specific regular meeting was chosen and the date was fixed for the
transitional review to be included as one of its agenda items, it was hoped that the WTO Secretariat
could inform China of the schedule for the meeting as soon as possible, so that China could make
necessary preparations.  To facilitate the process of the transitional review, Members would be
welcome to raise relevant questions of their concern to China well in advance of the review, and
China was prepared to do its best to address them under Paragraph 18.  On the other hand, China was
also entitled, under that same Paragraph, to raise issues and questions of its concern to other Memberswho were maintaining prohibitions, quantitative restrictions and other measures against imports from
China in manners inconsistent with the WTO rules and inconsistent with their own commitments with
regard to China's accession.  It was hoped that through such an exchange of views and dialogue, a
better understanding could be reached among the WTO Members on how to improve the
implementation by all Members and how to facilita te the faster and sounder growth of trade between
China and other WTO Members.  In this regard, China was ready to work very closely with the
TRIMs Committee and make every positive contribution it could towards the fulfilment of their
objectives.
43. The representative of the United States appreciated China's comments.  She agreed that the
Committee was under the obligations already provided for in the Protocol of Accession and
Annex 1A.  In that light, her delegation thought it imperative for the Committee to come up with a
way of proceeding, otherwise it might run into a situation where, for example, if it only conducted the
process at its last meeting the Committee would not be able to fulfill its mandate.  Her delegation's
intention was to propose a formula that would provide China with the utmost flexibility to help
advance the process.  It had proposed such a formula in other committees.  She thought that in orderfor the Committee to dispose of its responsibility and allow the CTG to proceed with its report, it had
to keep in mind the Chairman's suggestion that the Committee receive the information before the next
meeting.  She suggested the Chairman should consult on how the Committee could overcome this
hurdle and hoped that China would be ready to engage in some sort of discussion on this topic.
44. The Committee took note of the statements made and agreed
 to the Chairman's proposal that
he would brief his successor who would hold info rmal consultations with the parties involved.
F. OTHER BUSINESS
45. No comments were made.
G. ELECTION OF OFFICERS
46. The Committee elected Mr.Vassili Notis (Greece) as its Chairman.
Date of the next meeting
47. The Committee agreed to hold its next meeting on 10 July 2002.
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