RESTRICTED
WORLD TRADE G/TRIMS/M/5
27November 1996
ORGANIZATION(96-5015)
Committee onTrade-Related Investment Measures
MINUTES OFTHE MEETING HELD ON30SEPTEMBER
AND 1NOVEMBER 1996
Chairman: MrVassili Notis (Greece)
1. TheCommittee onTrade-Related Investment Measures helditsfifthmeeting on30September
and1November 1996.
2. TheCommittee adopted thefollowing agenda:
A. NotificationsunderArticle5.1oftheAgreementonTrade-RelatedInvestmentMeasures
B. Procedures forNotifications under Article 6.2oftheAgreement onTrade-Related
Investment Measures
C. Other Business
D. Annual Report (1996) totheCouncil forTrade inGoods under Article 7.3ofthe
Agreement onTrade-Related Investment Measures
A. NOTIFICATIONSRECEIVEDUNDERARTICLE5.1OFTHEAGREEMENTONTRADE-
RELATED INVESTMENT MEASURES
3. TheChairman recalled thatattheprevious meeting oftheCommittee clarifications ofafactual
nature hadbeensought inrelation tosome notifications. Inaddition, comments hadbeenmade on
thelateness ofsome notifications, certain measures pertaining toagricultural products andtherecent
introduction ofcertain measures inregard toautomobiles. Inrespect ofoneofthemeasures discussed
atthatmeeting, dispute settlement proceedings hadsubsequently beeninitiated.1Since thatmeeting
theCommittee had received asupplementary notification from thedelegation ofIndia
(G/TRIMS/N/1/IND/1/Add.2) andnewnotifications fromNicaragua (G/TRIMS/N/1/NIC/1), Nigeria
(G/TRIMS/N/1/NGA/1) andTrinidad andTobago (G/TRIMS/N/1/TTO/1).
4. Therepresentative ofJapan raised questions andconcerns regarding measures maintained by
Argentina, Colombia, Malaysia, Indonesia andKorea.
5. WithreferencetoaPresidentialDecreeadoptedbyArgentinainJanuary1996,therepresentative
ofJapan stated thatthisDecree modified measures notified byArgentina under Article 5.1byraising
theleveloflocalcontent required intheproduction ofautomobiles. Thisraised concerns inthelight
oftherequirements ofArticle 5.4oftheTRIMs Agreement.
1G/TRIMS/D/1 and2G/TRIMS/M/5
Page2
6. Referring tothediscussion attheprevious meeting ofanotification byColombia ofcertain
measures intheagricultural sector (G/TRIMS/N/1/COL/2), therepresentative ofJapan requested the
delegationofColombiatoexplainhowthesemeasureswerejustifiableundertheprovisionsoftheTRIMs
Agreement andunder Article 4.2oftheAgreement onAgriculture.
7. InrespectofnotificationsbyMalaysia(G/TRIMS/N/1/MYS/1andG/TRIMS/N/1/MYS/1/Rev.1),
therepresentative ofJapan noted thatoneofthese notifications hadbeensubmitted inMarch 1996,
i.e.nearly oneyearaftertheexpiry ofthedeadline fornotifications under Article 5.1,andasked for
more detailed information onthelocal content requirement related toinvestment incentives andon
thelocalcontent policy onmotor vehicles.
8. TherepresentativeofJapanstatedthatmeasuresrecentlyintroducedbyIndonesiaonautomobiles
wereinconsistent withArticles 2and5.4oftheTRIMs Agreement andalsoraised concerns inlight
ofvarious other provisions oftheWTO. Hisauthorities werestillconsidering possible avenues to
dealwiththismatter, including recourse todispute settlement. Noting thatIndonesia 'snotification
under Article 5.1hadbeensubmitted inMay1995, hereiterated theposition ofhisdelegation that
measures notified aftertheexpiry ofthedeadline fornotifications under Article 5.1could notbenefit
from thetransition period inArticle 5.2.
9. Therepresentative ofJapan asked whether Korea hadinplace localcontent requirements for
certain types oftractors oflessthan50horsepower and,ifso,whether thedelegation ofKorea could
provide anexplanation ofthejustification ofsuchrequirements under WTO.
10. Therepresentative oftheUnited States stated thathisdelegation joined inwithallquestions
andconcerns raised bytherepresentative ofJapan.
11. Therepresentative ofCanada noted thatCuba hadrecently introduced certain measures and
asked whether thedelegation ofCuba intended tonotify these measures totheCommittee.
12. Therepresentative ofNewZealand stated thatherdelegation remained interested inreceiving
information andclarifications onpoints which ithadraised attheprevious meeting inrespect ofcertain
notifications. Sheshared theconcerns ofthedelegation ofJapan inregard tothenotification made
byColombia inG/TRIMS/N/1/COL/2. Regarding thenotification byMalaysia in
G/TRIMS/N/1/MYS/1/Rev.1,sheaskedforanexplanationofwhichmanufacturedproductswerecovered
bythelocalcontent requirements related toinvestment incentives described inthefirstsection ofthat
notification. Inparticular, shewasinterested ininformation onwhether these measures applied to
foodmanufacturing andfoodprocessing.
13. Therepresentative oftheEuropean Community recalled thatattheprevious meeting his
delegation hadraised concerns regarding notifications made byArgentina, Colombia, India, Indonesia
andMalaysia. Herequested thatthesedelegations provide responses tothepoints made byhisdelegation
onthatoccasion.
14. Therepresentative ofArgentina stated thattheremarks bytherepresentative ofJapan regarding
Argentina 'sautomotive measures repeated points which hadbeenmade bytheJapanese delegation
attheprevious meeting andtowhich hisauthorities hadresponded inwriting onabilateral basis. He
suggested thatifthedelegation ofJapan wished toraisenewquestions inregard tothese measures,
itprovide those questions inwriting sothathecould convey them tohisauthorities.
15. Therepresentative ofSwitzerland noted thatIndiahadsubmitted anotification relating tomixing
requirements forcertain pharmaceutical products likepenicillin andintermediates ofrifampicin
(G/TRIMS/N/1/IND/1/Add.2). Since thenotification hadbeenmade onlyinApril 1996, itfelloutsideG/TRIMS/M/5
Page3
thetimeframe envisaged inArticle 5.1.Henoted thatthenotification didnotindicate thetimeframe
forthephase-out ofthese measures andasked thedelegation ofIndia toprovide information onthis
point. Thesame comments regarding thelateness ofthenotification andlackofinformation onthe
timeframe forthephase-out ofthenotified measures applied tothenotification received from the
delegation ofMalaysia inG/TRIMS/N/1/MYS/1/Rev.1.
16. TherepresentativeofColombia,referringtoconcernsraisedbyanumberofdelegationsregarding
thedomesticabsorptionrequirementsforcertainagriculturalproductsnotifiedinG/TRIMS/N/1/COL/2,
explained theevolution ofthelegalframework pursuant towhich thispolicy wasapplied, thestatus
ofthispolicy inrelation totheprovisions oftheTRIMs Agreement andtheAgreement onAgriculture,
itsadministration andcoverage anditsimpact onvolume andprice ofimports. Thestatement made
byColombia hasbeencirculated indocument G/TRIMS/W/5.
17. TherepresentativeofIndiaaskedtherepresentativesoftheEuropeanCommunityandSwitzerland
tosubmit their questions onIndia'snotifications inwriting. Inresponse tothecomment bythe
representative ofSwitzerland onthetiming ofthenotification inG/TRIMS/N/1/IND/1/Add.2, he
explained thatthisnotification wasnotanewnotification butanelaboration ofanearlier notification.
18. Therepresentative ofJapan, responding totheremarks bytherepresentative ofArgentina,
stated thatwritten responses which hisdelegation hadreceived inApril fromArgentina dealtonlywith
thequestion oftheduration ofthelocalcontent scheme forautomobiles butdidnotaddress thequestion
raised byhisdelegation attheprevious meeting oftheCommittee regarding theconsistency withthe
TRIMsAgreementoftherecentamendmenttothislocalcontentscheme.ThePresidentialDecreeadopted
inJanuary 1996required anincrease inthelocalcontent ratioby2.5percentperyeartoreach 67.5per
centin1999. While theoriginal measure introduced in1991 hadbeennotified byArgentina under
Article 5.1,thisrecent increase intherequired level oflocal content raised questions regarding its
compatibility withArticle 5.4.Herequested thatthedelegation ofArgentina notify thePresidential
Decree totheCommittee.
19. TherepresentativeofJapanechoedtheconcernsoftherepresentativeoftheEuropeanCommunity
regarding India'smeasures onprocessed agricultural products. Healsoasked thedelegation ofIndonesia
toexplain thelegaljustification under theTRIMs Agreement andunder Article 4.2oftheAgreement
onAgriculture ofmeasures notified byIndonesia inMay1995relating tocertain agricultural products
(G/TRIMS/N/1/IDN/1).
20. Therepresentative ofIndia asked therepresentative ofJapan tosubmit inwriting hisquestion
onIndia'smeasures relating toprocessed agricultural products.
21. Therepresentative ofKorea saidthathewould convey tohisauthorities thequestion raised
byJapan onmeasures inrespect oftractors andprovide aresponse atthenextmeeting. Onthequestion
oftiming ofnotifications referred tobysome delegations, hereiterated theviewofhisdelegation that
itwasnotclearfromthetextoftheAgreement thatmeasures notified aftertheexpiry ofthedeadline
fornotifications under Article 5.1could notbenefit from thetransition periods inArticle 5.2.
22. Therepresentative ofCanada requested thattheresponses provided bilaterally bythedelegation
ofArgentina tothedelegation ofJapan becirculated totheCommittee.
23. Therepresentative ofArgentina stated thatthePresidential Decree mentioned byJapan only
dealtwiththemethodology forthecalculation ofthelocalcontent ratioanddidnotaltertherequired
level oflocal content. Assuch, hisauthorities regarded thisDecree asbeing consistent withthe
notification submitted byArgentina under Article 5.1.Henoted therequest bytherepresentative of
Canada.G/TRIMS/M/5
Page4
24. Inresponse tothepoints raised byanumber ofdelegations, therepresentative ofIndonesia
stated thataspartofIndonesia 'songoing initiatives toimprove theinternational competitiveness of
localcompanies andstrengthen overall industrial development, theNational CarProgram hadbeen
established, withaviewtopromoting theinternational competitiveness ofIndonesia 'sautomobile and
automotive production anddeveloping thecapacity ofmultiple-source autoparts andcomponents.
Asdomesticdemandformotorvehicleswasexpectedtoincreaserapidlyaftertheyear2000,theNational
CarProgram wasintended tobring about major structural changes intheIndonesian automotive sector
sothatitcould develop intoaworld standard industry. TheProgram wasbased onPresidential
Instruction No.2/1996, which directed theMinister ofIndustry andTrade, theMinister ofFinance
andtheMinister ofInvestment andChairman oftheInvestment Coordinating Board totakethenecessary
actions tooptimize thenational carindustry byproviding guidance aswellastaxfacilities according
toprevailing regulations. Thefollowing policy decisions hadbeentaken inthiscontext. First, any
carcompany wasallowed toimport components freeofdutyandsellthevehicles itproduced without
paying theluxury tax,provided itbuiltvehicles withmore than60percentlocalcontent. Second,
any"pioneer" carcompany wasallowed toimport components freeofdutyandsellthevehicles without
paying theluxury tax,provided itbuiltvehicles withmore than20percentlocalcontent inthefirst
year, more than40percentinthesecond year, andmore than60percentinthethirdyear. Ifthe
pioneer carcompany failed tomeet these targets, itwould nolonger beabletobenefit from these
preferential conditions andwould havetopaytheimport duties andluxury taxes thathadbeenwaived.
Atpresent, carcompanies werebuilding vehicles withalocalcontent ofbetween 5percentand43per
cent. These policies wereexpected toencourage carcompanies toincrease theirlocalcontent, resulting
inarapid growth ofinvestments intheautomotive component industry. Thecomponent industry was
composed ofmedium-sized enterprises which employ large numbers ofworkers. Thus, thepolicy
decisions would beinstrumental inencouraging thetransfer oftechnology aswellasincontributing
tolarge-scalejobcreation.SeveralbilateralconsultationshadalreadybeenheldbetweentheGovernment
ofIndonesia andtheGovernment ofJapan. Inthecourse ofthese consultations, theGovernment of
Indonesia hadexplained indetail thereasons fortheimplementation oftheNational CarProgram and
hadasked fortheunderstanding oftheGovernment ofJapan onthismatter. Hisdelegation would
pursue bilaterally withthedelegation ofJapan theissueraised bytherepresentative ofJapan concerning
theagricultural measures described inIndonesia 'snotification.
25. Therepresentative ofMalaysia noted thathisdelegation 'snotification indocument
G/TRIMS/N/1/MYS/1/Rev.1 wasnotanewnotification butarevision inaccordance withtheagreed
standard format ofanotification thathadbeensubmitted within theprescribed period. Itwasunclear
fromthecomments made bysome delegations whatwastheprecise nature oftheirconcerns regarding
thelocalcontent measures inrespect ofmotor vehicles andhetherefore requested these delegations
tosubmit specific questions inwriting sothathisdelegation could provide afocused response. He
noted thattheinformation onthese measures provided intherevised notification corresponded towhat
wasrequired bytheagreed standard format. Hisdelegation would respond inwriting tothequestion
raised bytherepresentative ofNewZealand ontheproduct coverage ofthelocalcontent requirement
related toinvestment incentives.
26. Therepresentative ofAustralia, noting thatinsome instances issues raised intheCommittee
hadbeenpursued bilaterally, stressed thatintheinterest oftransparency answers provided toquestions
raised intheCommittee should besubmitted through theSecretariat totheCommittee.
27. Therepresentative oftheUnited States stated thattheremarks made bytherepresentative of
IndonesiaclearlyillustratedthatIndonesia'smeasuresconcerningautomobilesinvolvedablatantviolation
oftheAgreement which wasbestdealtwithinanother forum. Bywayofpreliminary comment on
thestatementbytherepresentativeofColombia,hereiteratedhisdelegation'sconcernsaboutColombia's
application ofaTRIM inrespect ofproducts thathadbeensubject totariffication under theAgreement
onAgriculture. Heechoed thecomments bytherepresentatives oftheEuropean Community andG/TRIMS/M/5
Page5
Switzerland onIndia'smeasures relating toprocessed agricultural products. Inrespect ofArgentina 's
measures onautomobiles, hecontested thattherecent amendment tothese measures merely involved
amethodological modification withaneffect equivalent tothatoftheoriginal measure. Intheview
ofhisdelegation, thisamendment raised aserious question astoitscompatibility withArticle 5.4.
Herequested thedelegation ofArgentina tomake available totheCommittee itsanswers tothequestions
raised bythedelegation ofJapan.
28. Therepresentative ofIndia asked therepresentative oftheUnited States tosubmit inwriting
anyspecific questions which hemight haveonIndia'snotification.
29. Therepresentative ofNewZealand thanked therepresentative ofColombia forhisexplanation
ofColombia 'sagricultural absorption policy measures. Pending detailed analysis ofColombia 's
statement, shereserved herdelegation 'sposition onthismatter.
30. TheChairman noted thatanumber ofdelegations hadresponded toquestions which hadbeen
raised while others hadundertaken todosoatthenextmeeting ortosubmit written answers. He
emphasized thatwritten responses should notonlybeprovided todelegations which hadraised questions
butalsototheSecretariat fordistribution totheCommittee. Itwashisunderstanding thatArgentina
would make itsanswers available forcirculation toallMembers.
31. Therepresentative ofArgentina saidthat,taking noteofthisrequest, hewould submit itto
hisauthorities forconsideration.
32. TheCommittee tooknoteofthestatements made andagreed torevert atitsnextmeeting to
notifications received under Article 5.1.
B. PROCEDURES FOR NOTIFICATIONS UNDER ARTICLE 6.2OFTHE AGREEMENT
ONTRADE-RELATED INVESTMENT MEASURES
33. TheChairman recalled thatatthemeeting inMarch theCommittee hadconsidered aproposal
prepared bytheSecretariat fortheimplementation ofArticle 6.2which requires Members tonotify
theSecretariat ofpublications inwhich TRIMs maybefound, including those applied byregional and
localgovernments andauthorities within theirterritories. TheCommittee hadagreed tomake some
changes tothisproposal andagreed thattheproposal wasacceptable toalldelegations, except India,
which needed further timetostudy it.Itwasagreed thattheproposal would beconsidered adopted
bytheCommittee assoonasIndia hadinformed theSecretariat thatitcould accept it.2
34. Therepresentative ofIndia saidthathisdelegation could agree totheamended proposal for
theimplementation ofArticle 6.2.
35. TheCommittee adopted theproposal, asamended atthemeeting inMarch andasfurther
amended bysubstituting inthelastparagraph "1February 1997" for"1July1996". TheCommittee 's
decision hasbeencirculated indocument G/TRIMS/5.
2TheSecretariat proposal, asamended atthemeeting inMarch, appears intheannex toG/TRIMS/M/4 .G/TRIMS/M/5
Page6
C. OTHER BUSINESS
(i) Derestriction andcirculation ofWTO documents
36. TheChairman drew theCommittee 'sattention totheDecision taken bytheGeneral Council
on18Julyonprocedures forderestriction andcirculation ofWTO documents.3Since most ofthe
documents oftheTRIMs Committee related tonotifications, itwasuseful toclarify howitwasintended
toapply these procedures tosuchdocuments. Theprocedures didnotspecifically address suchtypes
ofdocuments, except inrequiring thatdocuments thatcontain onlyinformation thatispublicly available
orinformation thatisrequired tobepublished under anyagreement shallbecirculated onanunrestricted
basis. Itwastheintention oftheSecretariat tocirculate documents containing notifications under
Article 5.1oftheTRIMs Agreement asunrestricted documents intheG/TRIMS/N/1/- series, provided
thatpursuant toitem(g)oftheAppendix totheDecision oftheGeneral Council Members could at
thetimeofthesubmission ofadocument indicate totheSecretariat thatthedocument should beissued
asrestricted. Thesame procedure would befollowed inregard tonotifications received under
Articles 5.5and6.2.
37. TheChairman noted thattheCouncil 'sDecision wasapplicable toalldocuments circulated
since theentry intoforce oftheWTO Agreement. TheSecretariat wasintheprocess ofpreparing
alistofdocuments which werecirculated asrestricted documents intheperiod between 1January 1995
and18July1996 butwhich were tobeconsidered asderestricted asof18Julyinaccordance with
theterms oftheGeneral Council 'sDecision. Thislistwould include notifications under Article 5.1
which before 18July1996hadbeencirculated asrestricted documents. Anumber ofthesenotifications
hadalready beenderestricted on28May1996 asaconsequence ofadecision taken earlier thisyear
toapply GATT 1947derestriction procedures pending adecision onderestriction procedures forWTO
documents. Alistofnotifications derestricted pursuant toGATT 1947 procedures wascontained in
document WT/INF/3.
38. TheCommittee tooknoteofthestatement bytheChairman.
(ii) Guidelines forobserver status ofinternational intergovernmental organizations
39. TheChairman recalled thaton18JulytheGeneral Council hadadopted Guidelines forObserver
Status intheWTO ofInternational Intergovernmental Organizations.4TheChairman oftheGeneral
Council hadbeenconducting consultations withother chairpersons onhowthese procedures might
beapplied, inparticular tothoseintergovernmental organizations thathadalready beengranted observer
status onanadhocbasisinparticular WTO bodies, soastoensure acoherent andcommon approach
tothismatter. These consultations hadnotyetbeenfinalized. TheCommittee would revert tothis
matter aftertheconsultations hadbeenconcluded since thedecision onobserver status atitsmeetings
would havetobetaken bytheCommittee. TheChairman proposed thatinthemeantime theCommittee
renew forthenextmeeting thegrantofadhocobserver status forthose intergovernmental organizations
which hadalready beenaccorded it.
40. Itwassodecided.
3WT/L/160/Rev.1
4WT/L/161, Annex 3G/TRIMS/M/5
Page7
D. ANNUAL REPORT TOTHE COUNCIL FOR TRADE INGOODS
41. Following informal meetings heldon30September andon11,21,29and31October, the
Committee adopted itsannual report under Article 7.3oftheTRIMs Agreement totheCouncil for
Trade inGoods (G/L/133).
42. Inconnection withtheadoption oftheannual report bytheCommittee, therepresentative of
NewZealand stated thatthebuilt-in agenda agreed during theUruguay Round formed thecoreofthe
future work programme oftheWTO. Herdelegation wastherefore concerned thatsome elements
ofthisbuilt-in agenda might beneglected oroverlooked. InthecaseoftheTRIMs Agreement, New
Zealand hadputforward amodest proposal toreaffirm theimportance ofwork onthebuilt-in agenda
oftheTRIMs Agreement. Thisproposal, which wasnotprescriptive astohowandwhen suchwork
should beundertaken, simply reaffirmed commitments already made byMembers. Herdelegation
wasdisturbed bytheselective approach which some Members appeared totaketowards thebuilt-in
agenda inWTO Agreements andwasdeeply concerned about thepossible implications ofthisselective
approach forthefuture oftheWTO andforitscredibility. Inviewofitsimportance, thismatter might
havetobetaken upinhigher bodies.
43. Therepresentative ofIndia stated thatitwastheunderstanding ofhisdelegation thatnothing
inthereport adopted bytheCommittee implied thattheCommittee should undertake work under
Article 9before theexpiry oftheprescribed timeperiod offiveyears.
44. Therepresentative oftheUnited States stated thathisdelegation wasoftheviewthatMembers
could atanytimeraiseissues relevant totheTRIMs Committee, including issues under Article 9of
theAgreement.
45. TheCommittee tooknoteofthestatements made.
DateoftheNext Meetings oftheCommittee
46. TheChairman informed theCommittee thattheSecretariat hadreserved inthedraftschedule
ofWTO meetings for1997 thedates of17March and15September formeetings oftheCommittee.