RESTRICTEDWORLD TRADE
ORGANIZATIONG/TRIMS/W/13
6 April 1998
(98-1358)
Comittee on Trade-Related Investment Measures Original:  English
QUESTIONS FROM THE UNITED STATES
The following communication, dated 26 March 1998, has been received from the Permanent
Mission of the United States with the request that it be circulated to Members.
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As discussed at the TRIMs Committee meeting of 16 March 1998, please find enclosed the
questions of the United States to Argentina, Vene zuela, Ecuador, Colombia, India, Nigeria, Uganda,
and to all WTO Members who have notified TRIMs pursuant to Article 5 of the TRIMs Agreement.As we requested in the meeting of 16 March 1998, we would appreciate it if, pursuant to TRIMs
Article 6.3, Members to whom questions have been di rected would provide answers in writing to the
TRIMs Committee prior to the next meeting of the TRIMs Committee.
A. To Argentina:
1. Does the 1996 decree increase the local content requirements above those in the 1991 decree?
The Argentine response to earlier questions posed by the United States appears to justify the increased
local content requirement as necessary to compensate fo r the change in valuation.  It is not apparent to
the United States that changing from the AFOR O method to FOB would reduce the local content
burden on auto manufacturers.  For example, the AF ORO method was based at least in part on the
relative weight of inputs.  Local inputs tend to be heavier (i.e., more costly to transport), and so wouldhave counted more in computing local content.  A change to FOB could result in a relatively smaller
value assigned to the same local input, thereby requiring the manufacturer to increase purchases of
locally-made inputs.
2. Does the change to model-specific measurement increase the TRIMs-inconsistency of the
regime?  In defending the change, the Argentine response states that new models have a three-year
period in which to reach a 50 per cent local content requirement.  This is true, but under the previous
regime, manufacturers could take advantage of this provision, as well as the ability to meet localcontent requirements by averaging across models.  Thus, the United States continues to believe that
the new decree has made it more difficult for manufacturers to meet the local content requirements.
Do you agree, and if not, why not?
3. Does the regime newly apply to auto parts manufacturers?  The Argentine response states that
participation in the regime by auto parts manufacturers is voluntary.  Please explain what penaltiesexist for non-compliance and/or incentives for compliance.
4. Please state how Argentina intends to phase-out the overall Auto TRIM by 1 January 2000?G/TRIMS/W/13
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B. To Venezuela, Ecuador, Colombia:
We have heard reports that your governments have decided on the outlines of a new
automotive regime, to be in place from 1999 to 2004.  We understand that there is a proposal under
consideration that would eliminate the existing 33 per cent local content requirement for importing
CKD kits and replace it with local content requirement for importing and exporting which is expected
to be set at 40-45 per cent in 1999 and increase 8 percentage points over five years (to 2004).  The
average percentage increase per year will be 1.6 percentage points.  The new local content
requirement will count the value of local parts and the value of locally incorporated labour.
Venezuela, Ecuador, and Colombia have all notified the Auto regime to the TRIMs
Committee.  Venezuela and Colombia notified the regime in a timely fashion on 31 March 1995 (but
did not specify the percentage of local content requirement).  Ecuador notified its auto regime on
20 March 1996 following their accession.
At the time of Ecuador's accession, the representative of Ecuador made the following
statement concerning the Auto Regime - this is  reflected in WT/L/77, 14 July 1995 (Report of the
Working Party on the Accession of Ecuador):
The representative of Ecuador acknowledged that the trade-related investment
measures described in this paragraph were inconsistent with the provisions of the
Agreement on TRIMs.  He confirmed that these measures would be eliminated prior
to 1 January 2000. . . . During the period in which these measures are applied,
Ecuador shall not modify the terms so as to  increase the degree of inconsistency with
the provisions of the TRIMs Agreement, in particular Article 2.  The Working Party
took note of these commitments.
With this as background, the United States would make the following questions to the
delegations of Venezuela, Ecuador, and Colombia:
1. Please describe to the Committee the parameters of this new regime that has been proposed to
be changed.
2. Is it true that you have provisionally decided to establish local content requirements as high as
45 per cent in 1999 and to increase the percentage thereafter?  Do you plan to change the way thelocal content requirements operate?  How do you reconcile the application of such new requirements
with Article 5.4 of the TRIMs agreement, which proh ibits increasing its inconsistency with Article III
of GATT 1994?
3. Is it true that the new regime would establish local content requirements for the period 1999
to 2004?  How do you reconcile this with your obligation under TRIMs Agreement Article 5.2 toeliminate such measures by the end of 1999?
4. To only Ecuador:  How do you reconcile the commitments made by Ecuador to the working
party on Accessions with a proposal that would:  (a) increase the level of local content in Ecuador's
auto regime in 1999;  and (b) continue to apply the local content TRIM after 1 January 2000?
C. To Uganda:
When can we expect responses to the questions we submitted at the last meeting?G/TRIMS/W/13
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D. To Nigeria:
We appreciate the notification submitted by Nigeria dated 6 March 1998.  We request
clarification as to the effect of this new notification on Nigeria’s original notification.  Do the local
content provisions noted in the first notifications no longer exist?
E. To India:
1. India has notified only one TRIM in the automotive sector, regarding "dividend balancing".
This is reflected in G/TRIMS/N/1/ IND/1/Add.1.
(a) What exactly do the "dividend balancing" provisions of that notification cover?
(b) Do they cover all local content provisions of the new Indian measure?
(c) Do they cover the trade balancing and export performance requirements of the new
Indian measure?
(d) Can India explain whether it is of the view that the new Indian programme is
consistent with TRIMs Article 5.4?  If so, please explain how India can make such anassertion in light of the new local conten t requirements and trade-balancing TRIMs
contained in the Indian measure that are not referenced in the TRIM notified by
India?
2. Even if it were consistent with the notification, it appears that the new programme is expected
to last beyond 1 January 2000.
(a) Is it the intention of the Indian government to extend the operation of this TRIM
beyond 1 January 2000?
(b) Please explain how this is consistent with India's obligations under the TRIMs
Agreement to eliminate all TRIMs by 1 January 2000.
F. To All WTO Members notifying TRIMs under Article 5 of the TRIMs Agreement
Pursuant to Article 6.3 of the TRIMs Agreement which provides that "each Member shall
accord sympathetic consideration of requests for information on any matter arising from this
Agreement raised by another Member", and with the view towards better understanding the processes,
timetables, and intentions of WTO Members to eliminate by 1 January 2000 TRIMs that they have
notified to the TRIMs Committee, the United States poses the following questions to all WTOMembers who have notified TRIMs under Article 5 of the TRIMs Agreement:
1. Please describe the governmental processes to eliminate all TRIMs identified in your
notification(s) to the TRIMs Committee, and also identify the government agencies or bodies directly
or indirectly involved, whether the elimination of the TRIM(s) requires a decision of the legislature,
executive officials, and/or whether it can be eliminated through an administrative rule change,executive order or other mechanism.
2. Please identify all notification procedures, if any, for proposed rule/legal changes to eliminate
all TRIM(s) notified to the TRIMs Committee, includ ing the form and identity of the publication (or
electronic notification if applicable), and the process, if any, for receiving public comment on the
proposed TRIMs elimination.G/TRIMS/W/13
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3. Please describe the timetable involved in the various processes and procedures identified in
answers to questions above for eliminating all TRIM(s) notified to the TRIMs Committee by
1 January 2000.
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