. /.RESTRICTEDWORLD TRADE
ORGANIZATIONG/C/W/192
17 March 2000
(00-1097)
Council for Trade in Goods Original:  English
QUESTIONS FROM THE EUROPEAN COMMUNITIES REGARDING
THE MALAYSIAN 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. In your notification to the TRIMs Committee of March 1996 you notified two TRIMs:
a) Local Content requirement related to Investment Incentives and
b) Local Content Policy on Motor Vehicles (LCPMV).
The GoM’s request for extension dated 29 December 1999 covers only one of the two TRIMs
(LCPMV).  Has the other TRIM been eliminated in the meantime?  If so, have you notified the
TRIMs Committee?  Or is the measure still in force?  If so, why has the GoM requested an extension
only for the LCPMV?  Please clarify the situation.
2. Please describe the main features of the Malaysian automotive industry (including parts and
components).
3. Please describe in detail the measure for which the GoM is requesting an extension (local
content percentages, basis for calculation, product coverage, type of investment, type of producers to
which it applies etc.).
4. In your 1996 notification to the TRIMs Committee you stated that the « TRIM is applied
through administrative measures » and that « Malaysia has no local content laws or regulations ».
What does this mean?  What form do these administrative measures take?  Please provide examples of
« administrative measures » in the area of the TRIMs for which you are requesting an extension. 
5. In your 1996 notification, it is said that different levels of local content « have been
achieved » in the various product categories.  What does this mean?  What are the consequences of
achieving or not achieving the local content requirements?
6. In the same notification it is also said that local content requirement is « just condition and
there is no tax or financial advantage involved ».  What does this mean? Does it mean that
authorisation to invest/operate is denied unless local content requirements are fulfilled?  In other
words, is fulfilling the TRIM a condition for establishment?  Or, alternatively, is any form of
penalties/sanctions envisaged in case conditions are not met?G/C/W/192
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7. Why do you consider that the TRIMs have been effective in developing Malaysia’s
automotive industry?
8. What has been, according to the GoM, the effect of the exisitng TRIMs on Foreign Direct
Investment  (FDI) in the automotive sector?  Do you consider that the existing TRIMs have attractedor rather discouraged inflows of FDI?
a) Can you provide a breakdown of FDI by country  of origin in the automotive sector for the
period 1995-1999 and for a period of 5 years preceding the adoption of administrative
measures envisaging TRIMs?
9. Please provide an evaluation of the direct impact of the TRIMs on employment in the sector
and describe the methodology used to arrive at your assessment.10. What would the effect on employment be if the WTO should reject the requested extension?11.  What measures has the GoM 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 GoM realise that it would be unable to meet the deadline of 31 December
1999 to phase out the TRIMs?
12. Why did the GoM wait until 29 December 1999 to notify its requests for extension?13.  Why did the GoM request an extension for 2 years, until 31 December 2001? How did the GoM
arrive at the conclusion that such period of extension was needed?
14. What further measures are planned by GoM during this period, to prepare for elimination of the
TRIMs?
15. When would the GoM be prepared to circulate in formation on the domestic process leading to the
elimination of the TRIMs, both from the legislative and from the industrial policy point of view?
16. Is there an ASEAN common automotive policy?
a) If so, Please describe in detail the main features of the regime.
b) What is the link between the request for extension of the TRIMs and the common
automotive policy or relations with ASEAN partners?c) What if the extension is not granted? Would this have an effect on other ASEAN
countries?
d) To what extent does Malaysia currently calculate imports from other ASEAN countries as
being "local content"? How will these issues develop in the coming years?
Data  requested:
-imports/exports per country for all categories of products affected by the TRIM
-FDI per country of origin (see point 8)
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