RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/183
10 February 2000
(00-0504)
Council for Trade in Goods Original:  English
QUESTIONS FROM THE GOVERNMENT OF THE UNITED STATES
REGARDING THE TRIMS EXTENSION REQUEST MADE
BY THE GOVERNMENT OF MALAYSIA
The following communication, dated 8 February 2000, has been received from the Permanent
Mission of the United States.
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Measures
1. Please describe in detail the measures that are included in the Government of Malaysia’s
(“GOM”) request. Could the GOM please elaborate beyond the description provided in
previous submissions?  For example for the TRIMs in the motorcycle, passenger car andcommercial vehicles sectors:
(a) What percentage of local content is currently required?
(b) What kinds of local goods qualify (anything?  some parts but not others? etc.)
(c) What domestic and foreign producers are required to comply with these measures?
(d) Are there any (local or foreign-owned) entities that are exempt?
2. Regarding the “administrative measures” described in paragraph 2.3 in the GOM notification
(G/TRIMS/N/1/MYS/1/Rev.1):
(a) What is meant by “administrative measures”?
(b)  Please provide a list of all measures to which the notification applies, and the date of
such measures.
(c) Have copies been published, and if so, where?
(d) Which of these measures is still in force, and which have expired or been rescinded?
3. How have the measures changed over time?
(a) Have there been any changes to the measures covered by your extension request since
1 January 1995?  If so, what are they?  For example, have these measures increased
the amount or percentage of local content required since 1 January 1995?
(b) Your TRIMs notification states that there are no advantages given to participants in
this program.  Is this still accurate?  If not, please detail the advantage including what
formulas are used to decide on the scope of the benefits and what is the total value of
such benefits?
4. The implementing agency, as listed in the GOM’s TRIMs notification is the Malaysian
Industrial Development Authority (MIDA).  Is this statement still accurate?G/C/W/183
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(a) What responsibilities does this organization have generally?
(b) What is its responsibilities with respect to the TRIMs measures and the motor vehicle
sector?
(c) Are there any other GOM agencies or other entities or persons with responsibility for
implementing or otherwise supervising the measures identified in question 1?
Basis for the Extension Request
5. The GOM extension request provided to the Council for Trade in Goods asserts that the
“financial crisis, which also affected Malaysia, severely impacted the development of the
motor vehicle industry” and that the “economic  downturn resulted in significant decline in
demand where sales of motor vehicles contracted.”  Please elaborate on the basis for yourrequest, for example:
(a) How was the two-year period determined?   What was the empirical evidence
examined to gauge that an additional two years would be required to ensure that your
industry would recover?
(b) What is the basis of the statement that 200 companies would close if the TRIMs
measures were removed?  What types of companies are these?
(c) Please provide details of the consolidation and readjustment alluded to in the  final
paragraph of your request.  Please explain why these events support your request.
(d) What evidence can be provided to show that the motor vehicle program has spawned
local entrepreneurs, “particularly in the indigenous community?”
(e) Article 5.3 of the TRIMs Agreement requires the Council for Trade in Goods to
conclude that an applicant for an extension has demonstrated “particular difficulties.”
How does the GOM consider that the difficulties it has described fit this requirement?
(f) What makes these difficulties different from other Members’ situations?
6. Paragraph 2.1 of the GOM notification says that the motorcycle industry already exceeded the
local content requirement.
(a) Is this still accurate?
(b) If so, does the GOM extension extend to motorcycles?
(c) If so, how is this justified given that motorcycles are above the minimum local
content requirement?
7. Another key factor to focus on is employment:
(a) Is there any basis for an assumption that j obs have been created by the TRIMs-related
polices since 1995?
(b) What was the total employment in the industry before the TRIMs policy, and what
are current employment figures?
(c) Is there any basis for an assumption that jobs will be created or saved by the
continuation of the TRIMs-related policy after 1 January 2000?
(d) Which entity, agency or persons analyzed your employment estimates?
8. With respect to “development, financial, and trade needs” referenced in Article 5.3:
(a) How is the maintenance of these TRIMs part of the development plans and needs of
Malaysia?
(b) How long have such TRIMs been part of the development plans and needs?G/C/W/183
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(c) How can it be determined that these same development policies will not still be used
and needed after a two year period?  Why should one expect that this policy will be
different 1, 2, 5, or 10  years from now?
(d) Were the GOM’s development policies part of the development needs and plans of
the GOM prior to the Uruguay Round?
(e) What are the financial needs of the GOM related to the maintenance of the TRIMs?
(f) What analysis has been conducted to determine whether the elimination of the TRIMs
would actually increase, decrease, or be neutral concerning the financial needs of
Malaysia?
(g) Are there any other particular issues that the GOM believes should be taken into
account with respect to these factors?  Please describe and discuss such issues.
9. Please describe the domestic motor vehicle production and parts and components industries in
detail.  What efforts have they taken to modernize or be more competitive internationally over
the last five years?  Additionally:
(a) Please describe the specific manner in which the notified TRIMs have been
administered in connection with specific motor vehicle production projects (by
manufacturer and models).
(b) Please also explain which projects benefitted from TRIMs prior to the 1995
notification of such measures to the WTO, and the motor vehicle projects to which
TRIMs have been extended since 1995.
(c) Given that, according to some estimates, domestic production accounts for more than
80 percent of the Malaysian market for motor vehicles -- which suggests that TRIMs
and other government measures have substantially promoted the domestic industry --
how should WTO Members evaluate Malaysia’s request for an extension?
(d) Has production capability in the projects covered by the extension request increased
during the period from 1997 to the present?
10. Prior to making the decision to request an extension, what measures had the relevant
industries and the GOM undertaken to begin the transition to a system that did not rely on
TRIMs?
(a) What types of liberalization adjustments were or were not completed?
(b) At what point did the GOM make the decision to stop this process of becoming
TRIMs consistent (or does the process continue)?
(c) What would the process be for changing the local content requirements – ( i.e.,
administrative changes, legislative changes)?
(d) How quickly could such changes be implemented?
11. What types of efforts were undertaken to prepare the relevant industries for the removal of
TRIMs on 1 January 2000?  Specifically:
(a) Did the GOM conduct discussions with the private sector and with labour
organizations at that time and even well before the completion of the Uruguay Round
to inform them that these policies would be eliminated in 2000?
(b) What kind of domestic consultation process concerning TRIMs has been conducted
over the past five years?
(c) What administrative or legislative steps have which offices and officials explored
with which industry and labour groups?
(d) Are there legislative or administrative drafts that have been submitted for
consideration over the past 5 years?G/C/W/183
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(e) What plans exist for adjusting to the elimin ation of such TRIMs if there is no grant of
an extension from the Council?
12. Has the GOM considered other non-TRIMs options that would protect the domestic industry
but would allow for the elimination of your TRIMs regime as it currently exists?  Forexample:
(a) Why is it necessary to retain the local content requirements in all sectors (i.e.,
motorcycles, passenger cars and commercial vehicles)?
(b) Please describe the analysis/research th at the GOM undertook (including alternatives
to a TRIMs extension that were considered) to ensure that the measures included in
the GOM’s extension request need to be retained.
Statistics
13. What is the GOM’s estimation (both in production amounts and values) of future foreign
investment in its domestic market by manufacturers of motor vehicles and related industriessuch as motor vehicle parts production?
14. What is the history of investment inflows due to the Malaysian TRIMs program?
Specifically:
(a) Have investments increased since the TRIMs policy was introduced?
(b) From which WTO members have the investments originated?
(c) Would investment decrease if the TRIMs policy were eliminated?
(d) What studies have been done of this possibility?
15. What are the destinations for exports from Malaysia for 1998 (i.e., what countries) for
motorcycles, passenger cars, commercial vehicles and motor vehicle parts and what are the
values and quantities (if applicable) of these exports?
16. What are the figures for:  production, sales, exports, and imports of motorcycles, passenger
cars, commercial vehicles, SKDs, CKDs, and motor vehicle parts and components for 1996,
1997, 1998, and, if available, 1999?  In addition, what is the forecast for your industry for theyear 2000?
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