RESTRICTED  
  
G/TRIMS/M/36  
 
5 September 2014  
(14-5076)  Page: 1/19  
Committee on Trade-Related Investment Measures    
 
MINUTES OF THE MEETING HELD ON  
20 JUNE 2014 
CHAIRPERSON: MR TSOTETSI MAKONG (LESOTHO) 
1.  The Committee on Trade-Related Investment Measures (the "Committee") held a meeting on 
20 June 2014, convened in WTO/AIR/4315.  
2.  The Committee adopted the following agenda: 
1   BRAZIL – CERTAIN LOCAL CONTENT PROVISIONS IN THE 
TELECOMMUNICATIONS SECTOR - REQUEST OF THE UNITED STATES AND JAPAN (G/TRIMS/W/93); (G/TRIMS/W/99); (G/TRIMS/W/107); AND (G/TRIMS/W/113) .......................................................................................................... 2
 
2   BRAZIL – TAX PREFERENCES LINKED TO LOCAL CONTENT CONDITIONS IN SEVERAL SECTORS – REQUEST OF JAPAN (G/TRIMS/W/118); (G/TRIMS/W/124) .......................................................................................................... 3
 
3   INDONESIA – CERTAIN MEASURES  ADDRESSING LOCAL CONTENT IN 
INVESTMENT IN THE TELECOMMUNICATIONS SECTOR - REQUEST OF THE EUROPEAN UNION, THE UNITED STATES AND JAPAN (G/TRIMS/W/61); 
(G/TRIMS/W/63); (G/TRIMS/W/71); (G/TRIMS/W/75); (G/TRIMS/W/78); 
(G/TRIMS/W/80); (G/TRIMS/W/86); (G/TRIMS/W/96); (G/TRIMS/W/104); 
AND (G/TRIMS/W/131) .................................................................................................. 4
 
4   INDONESIA – CERTAIN LOCAL CO NTENT PROVISIONS IN THE ENERGY 
SECTOR (MINING, OIL AND GAS) - REQUEST OF THE EUROPEAN UNION, THE 
UNITED STATES AND JAPAN (G/TRIMS/W/70); (G/TRIMS/W/74); (G/TRIMS/W/79); (G/TRIMS/W/88); (G/TRIMS/W/100); (G/TRIMS/W/108); 
(G/TRIMS/W/123); AND (G/TRIMS/W /128) .................................................................. 5
 
5   INDONESIA – NEWLY ADOPTED INDUSTRY LAW AND TRADE LAW - REQUEST 
OF THE EUROPEAN UNION, THE UNIT ED STATES, JAPAN AND CANADA ........................... 7  
6   INDONESIA – MINIMUM LOCAL PRODUCT REQUIREMENT FOR MODERN 
RETAIL SECTOR - REQUEST OF THE EUROPEAN UNION, THE UNITED STATES AND JAPAN ......................................................................................................................... ..... 9
 
7   NIGERIA – CERTAIN MEASURES TAKEN IN THE "ACT TO PROVIDE FOR THE 
DEVELOPMENT OF NIGERIAN CONTEN T IN THE NIGERIAN OIL AND GAS 
INDUSTRY" OF APRIL 2010 - REQUEST OF THE EUROPEAN UNION AND THE UNITED STATES (G /TRIMS/W/89) ................................................................................ 10
 
8   RUSSIA – LOCAL CONTENT REQUIREMENTS FOR AGRICULTURAL EQUIPMENT 
- REQUEST OF THE EUROPEAN UNION AND THE UNITED STATES (G/TRIMS/W/116); (G/TRIMS/W/130) ........................................................................ 12
 
9   RUSSIA – CERTAIN MEASURES RELATING TO INDUSTRIAL ASSEMBLY - 
REQUEST OF THE EUROPEAN  UNION, THE UNITED STATES AND JAPAN ......................... 13  
10   UNITED STATES – CERTAIN LOCAL CONTENT REQUIREMENTS IN SOME OF 
THE RENEWABLE ENERGY PROGRAMS – REQUEST OF INDIA (G/TRIMS/W/117); 
(G/TRIMS/W/129/ REV.1) ............................................................................................. 15  G/TRIMS/M/36 
 
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  11   UNITED STATES – DOMESTIC CONTENT REQUIREMENT IN PROCUREMENT 
BY WATER UTILITIES IN THE US – RE QUEST OF INDIA (G/TRIMS/W/121) .................. 16  
12   URUGUAY – LOCAL CONTENT REQUIREMENTS FOR WIND POWER 
EQUIPMENT – REQUEST OF THE UNITED STATES (G/TRIMS/W/125); 
(G/TRIMS/W /132) ........................................................................................................ 17  
13   OTHER BU SINESS .................................................................................................... 18  
13.1   India - certain preferences to dome stically manufactured electronic goods ...................... 18 
14   DATE OF THE NEXT MEET ING .................................................................................. 18  
15   ELECTION OF  OFFICERS .......................................................................................... 19  
 
1  BRAZIL – CERTAIN LOCAL CONTENT PR OVISIONS IN THE TELECOMMUNICATIONS 
SECTOR - REQUEST OF THE UNITED STATES AND JAPAN (G/TRIMS/W/93); 
(G/TRIMS/W/99); (G/TRIMS/W/107); AND (G/TRIMS/W/113) 
3.  The Chair informed Members that this item had been on the agenda since May 2012. Questions 
had been posed to Brazil in G/TRIMS/W/93 and G/TR IMS/W/107, to which Brazil had responded in 
documents G/TRIMS/W/99 and G/TRIMS/W/113, respectively.  
4.  Japan reiterated its systemic concerns abou t the local content requirements imposed by Brazil 
on the winning bidders of an auction conducted in 2012 on radio frequency spectrum. 
Furthermore, Japan expressed again its interest in  the order by the Ministério das Comunicações 
do Brasil, announced in February 2013, with regard  to an eventual auction of the radio frequency 
spectrum in the 700 MHz band radio frequency. Japan understood that the bidding would be 
conducted in 2014 and requested Brazil to indicate the timing of the auction and whether or not it 
would apply local content requirements of the same nature. 
5.  The United States recalled its concerns about a 2012 auction of radio spectrum in Brazil in the 
450 MHz and 2.5 GHz bands. Brazil had required th at winning bidders commit to "purchase goods, 
products, equipment and systems for telecommunications and data networks with national technology," and ensure a 70% local content ratio in  its infrastructure deployment after five years. 
It was rumoured that Brazil would repeat this practice in the auction of radio spectrum in the 700 
MhH band. On 27 February 2013, ANATEL, Brazil's telecom regulator, had published for public 
comment the proposed "Regulation on Conditions for Use of Radio in the range of 698 MHz to 806 Mhz", and on 28 April 2014 ANATEL had released a draft bid document for applicants interested in 
bidding on rights for the 700 MgH radio frequencies to provide commercial mobile radio services.  
6.  The Draft Bid Notice appeared to include a le gal requirement for applicants to give preference 
to locally-produced equipment, in building out a ne twork to use those frequencies, as well as a 
requirement to meet specific milestones over time  in ensuring local content of the infrastructure 
(including software) deployed. The United States asked Brazil to explain when: (a) the bid document would be finalized; (b) applications would be processed; and (c) winning bids would be 
announced. 
7.  The Draft Bid Notice appeared to include a requirement that the winning bidders commit to 
"purchase goods, products, equipment and systems for telecommunications and data networks with national technology." Specifically, it appeared that the winning bidder must ensure a 70% 
local content ratio in its infrastructure deploy ment between 2017 and 2022. The United States 
asked Brazil to confirm if the US interpretation of this bid document was correct as well as to explain: the purpose of this policy; how Brazil would propose defining "national technology" for 
purposes of implementing that policy; whether, if a company sought to utilize "foreign" technology 
that it considered optimal for its network, ANATEL  would require that the preferred technology be 
r e j e c t e d  i n  f a v o u r  o f  a n  a r g u a b l y  i n f e r i o r  t e c h n o l o g y  t h a t  w a s  p r o d u c e d  l o c a l l y ;  w h a t  t h e  
enforcement mechanism would be in case a winning bidder was unable or unwilling to meet the 
local content requirements; and how that appare nt requirement to use local content comported 
with the obligations in Article 2 of the TRIMS Agreement and the illustrative list thereto? 
8.  The European Union shared the concerns rais ed by the United States and Japan and invited 
Brazil to explain its definition of "national tec hnology". Furthermore, as it was requested that G/TRIMS/M/36 
 
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  operators winning the 4G licences purchase at least 60% of 4G local equipment (50% produced 
locally and 10% developed locally) with a gradual increase up to 70% by 2017, the European Union reiterated its preoccupation regarding the impact of that measure directly on foreign operators who were affected by local content requirements. 
9.  Australia expressed its general concern regarding the increasing number of local content 
provisions implemented by WTO Members. Furt hermore, as the Chair of the G20 for 2014, 
Australia noted its particular concern that, according to the WTO's most recent trade-monitoring 
report of G20 countries, new local content measur es were being introduced. While some programs 
listed in trade monitoring reports might simply encourage consideration of local suppliers, Australia was concerned about the lack of transparency around many existing local content measures. Returning to the specific matter, Australia recalled its position in previous meetings over Brazil's 
so-called "temporary" measures, in this Committee, in the Committee on Market Access and in the 
Council for Trade in Goods ("CTG"). Australia shared the concerns of other Members regarding the measures applied by Brazil. Brazil's so-called "tem porary" measures appeared to have evolved into 
a permanent use of indirect taxes to benefit a broadening range of goods and sectors through 
domestic content requirements. Those measures were broader than telecommunications, and included Brazil's automotive sector. Australia remained concerned that Brazil had chosen a 
combination of elements relating to tax pref erences which suggested that those preferences 
related not to value-adding in the production chain but to local content requirements. Those mechanisms entrenched distortions in Brazil's domestic market and were discriminatory against imported goods. Australia would continue to monitor developments closely and asked Brazil to 
refine its measures so as to ensure that its markets remained open to fair competition with 
imported goods, consistent with its international obligations.  
10.  Brazil noted that the Brazilian Government - like many others - was committed to fostering 
innovation, streamlining investment and promotin g the sustainable development of its economy, 
based on technology, innovation and a well-qualified workforce. With regard to the telecommunications sector, Brazil remained committed to developing its network. In recent years, 
efforts had been undertaken in Brazil to develop the sector considered vital to the country's 
security interests. There was ample participation of foreign enterprises in that sector in Brazil, comprising both companies already operating in Brazil and newcomers. The different bidding processes launched in recent years had had an important role as an instrument of economic and 
social development, contributing, in a non-discriminatory way, to regulate the use of band spectra 
in Brazil. Those processes were not mere commercial transactions. They aimed at regulating the use of an important natural resource to the benefit of the country´s economic social and strategic 
interests, in line with WTO rules and objectives. With regard to the bidding concerning 4G services 
in 700 MHz band, Brazil's regulatory agency, AN ATEL, had conducted public consultations until 
3 June. The results of that process were currently  being processed by ANATEL and should be made 
public soon. Brazil was ready to provide additional information to interested delegations, in Geneva 
or in capital. 
11.  The Committee took note of the statements made. 
2  BRAZIL – TAX PREFERENCES LINKED TO LOCAL CONTENT CONDITIONS IN SEVERAL 
SECTORS – REQUEST OF JAPAN (G/TRIMS/W/118); (G/TRIMS/W/124) 
12.  The Chair informed Members that questions had been posed to Brazil in G/TRIMS/W/118, to 
which Brazil had responded in document G/TRIMS/W/124.  
13.  Japan recalled its previous statements regarding the assistance program for the automotive 
sector in Brazil INOVAR-AUTO. While appreciating the view on the overall objective of the program 
expressed by Brazil at the last meeting of th e Committee, Japan had not been convinced of the 
consistency of the measures under the program with the relevant provisions under the WTO, 
including Article III of the GATT and Article 2 of the TRIMs Agreement. In addition, Japan 
reiterated its concern about recent proliferation of the use by Brazil of indirect taxes to various sectors for the purpose of supporting domestic  manufacturing and exports. Japan noted its 
concerns about the fact that the use of indirect taxes extended to sectors such as communication 
network equipment. Japan urged the Brazilian authorities not to adopt or implement indirect tax measures inconsistent with the relevant provisions of the WTO Agreement. G/TRIMS/M/36 
 
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  14.  The United States shared concerns about the apparent proliferation of a type of tax preference 
program under which the tax on investments was partially forgiven contingent on use of local 
content. While appreciating Brazil's past assert ion about the right of WTO Members to regulate 
production, Members must do so in a manner consistent with their WTO obligations, including 
obligations under the TRIMS Agreement. The United States asked whether those tax provisions 
provided a benefit contingent on use of domestic goods and requested an explanation of the policies and objectives of Brazil regarding the ever-growing list of tax exemptions based on local 
content. 
15.  The European Union had repeatedly expressed its concerns about Brazil's tax programs in this 
and other WTO committees. The European Union on 19 December 2013 had requested 
consultations with Brazil under the Dispute Se ttlement Understanding ("DSU") on a number of 
problematic tax measures. The European Union was seriously concerned about a number of 
legislative and administrative procedures currently ongoing in Brazil aimed at enhancing and/or extending the duration of some of the tax programs at issue, for instance, of the so-called 
"informatics law", whose extension for a further period of 10 years (until 2029) had reportedly 
been approved by Brazil's Lower House. The European Union nevertheless hoped that its action under the DSU would lead to a positive solution to that serious matter.  
16.  Canada shared the systemic concerns regarding Brazil's measures, which appeared to be 
incompatible with TRIMs commitments as they discriminated against foreign companies. As a 
member of the G-20 group of countries, Canada supported the commitment made by Leaders to 
resist trade protectionism and encouraged Brazil to follow through on that commitment. 
17.  Brazil assured interested delegations that it gave its utmost attention to this issue and was 
ready to provide all clarification needed regarding technical aspects of the measures adopted. 
Brazil's measures were part of an effort to implement a modern industrial policy, within the 
boundaries granted by the multilateral trading ru les. They were designed to improve Brazil's 
economic development, while promoting technolo gical innovation, protecting the environment, 
creating opportunities for a well-qualified workforce and helping its industries integrate into global 
value chains. Brazil was committed to improving the business environment for domestic and 
foreign investors alike and one main focus was the attempt to gradually rationalize and simplify its complex tax system. These measures constituted an effort to align the Brazilian tax system with the practice of most countries, in a transparent and non-discriminatory manner, as illustrated by 
the Inovar-Auto Program, which benefited companies from Japan and other countries that 
intervened there that afternoon. 
18.  The Committee took note of the statements made. 
3  INDONESIA – CERTAIN MEASURES ADDRE SSING LOCAL CONTENT IN INVESTMENT IN 
THE TELECOMMUNICATIONS SECTOR - REQUEST OF THE EUROPEAN UNION, THE UNITED 
STATES AND JAPAN (G/TRIMS/W/61); (G/TRIMS/W/63); (G/TRIMS/W/71); 
(G/TRIMS/W/75); (G/TRIMS/W/78); (G/TRIMS/W/80); (G/TRIMS/W/86); 
(G/TRIMS/W/96); (G/TRIMS/W/104); AND (G/TRIMS/W/131) 
19.  The Chair recalled that that issue had been considered at the Committee meetings held on 
20 May and 16 October 2009, 1 October 2010, 3 October 2011 and 4 May and 1 October 2012, 
20 April 2013 and 3 October 2013. Questions had been posed to Indonesia in documents 
G/TRIMS/W/61, 71, 78, 86 and 104. Responses to these questions could be found in documents G/TRIMS/W/63, 75, 80, 96 and 131, respectively.  
20.  The European Union reiterated its general preoccupation with regard to the "mushrooming" of 
investment and local content problems in Indonesian legislation and in particular with local content 
provisions in the telecoms sector, which were a long-standing problem that the EU had raised on 
several occasions, including at ministerial level. It urged Indonesia to address the relevant 
regulatory obstacles which would set better conditions to attract telecom investments in Indonesia and eventually benefit the country itself as Indonesi a aimed to attract more FDI in this (and other) 
sectors. It asked whether Indonesia envisaged taking other measures that would support the same 
public policy objectives but would not unnecessary distort trade and investment in that field and 
whether Indonesia was planning to further increase the mandatory local content requirements from 40% to 50% and if so, why. G/TRIMS/M/36 
 
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  21.  Japan noted that, while it appreciated the effort by Indonesia to provide its views in document 
G/TRIMS/W/131 on the questions raised by Japan, the document did not address Japan's 
continuing concern that local content requirements in the telecommunications sector of Indonesia could be implemented inconsistently with the relevant WTO rules. The sole fact that the projects 
were funded by the government and government-selected operator(s) through a bidding process 
was not sufficient to regard such entities as government institutions or under the control of the government. While Japan recognized that if "service obligation operator(s)" carrying out 
procurement were the government itself or entities under the control of the government, such 
procurement would have been considered "government procurement", Japan was unclear as to why Indonesia regarded procurement by service obligation operators on telecommunications as government procurement and asked whether Indonesia regarded such operators as government 
agencies or entities under the control of the government. Further, in the context of Article III:8(a) 
of GATT, procurement by government agencies  of products purchased "for governmental 
purposes" was regarded as "government procuremen t". The term "for governmental purposes" did 
not simply mean for the aim of government but meant for government use, consumption or 
benefit. Procurement by a government which was in tended for commercial activities should not be 
regarded as "government procurement". Finally, Japan asked Indonesia for information regarding 
who used, consumed and benefited from such procurement. 
22.  The United States appreciated Indonesia's responses in G/TRIMS/W/131, but remained 
concerned by local content requirements in telecommunications decrees adopted over the last 
several years, in particular, whether those requ irements resulted in favourable treatment for 
domestic products over imported products and whether investors could be penalized if they did not 
comply. The United States asked Indonesia why it had adopted such measures especially at a time when Indonesia was seeking to develop its telecommunication sector, which, although it presented 
opportunities for both Indonesian and foreign companies, much of the resources needed to 
develop the infrastructure were not found domestically and would have to come from outside Indonesia. Despite raising concerns, bilaterally and in the Committee with Indonesia, the 
United States noted that it had yet to make progress towards addressing its concerns. Moreover, 
instead of curtailing the use of local content re quirements, Indonesia appeared to be expanding 
their use to other sectors, as demonstrated by th e ever growing list of concerns raised in this 
Committee; the United States expressed its grave concern about this expansion, especially as the 
measures harmed Indonesia's investment and business climate.  
23.  Canada had similar concerns and strongly encouraged Indonesia to consider the impact such 
provisions could have on investment and innovation. Canada was interested in ensuring non-
discriminatory treatment in the Indonesian telecommunications sector and would follow-up on 
developments in the sector. 
24.  Indonesia noted that the issue had been ex haustively discussed. If delegates had further 
concerns or questions, they were invited to send  them in writing so that Indonesia could provide 
proper responses accordingly.  
25.  The Committee took note of the statements made. 
4  INDONESIA – CERTAIN LOCAL CONTENT PROVISIONS IN THE ENERGY SECTOR 
(MINING, OIL AND GAS) - REQUEST OF THE EUROPEAN UNION, THE UNITED STATES 
AND JAPAN (G/TRIMS/W/70); (G/TRIMS/W/74); (G/TRIMS/W/79); (G/TRIMS/W/88); (G/TRIMS/W/100); (G/TRIMS/W/108); (G/TRIMS/W/123); AND 
(G/TRIMS/W/128) 
26.  The Chair informed Members that this item had been on the agenda at Committee meetings 
held on 16 October 2009, 1 October 2010, 3 October 2011, 4 May and 1 October 2102, 20 April 
and 4 October 2013. Questions had been posed to Indonesia in G/TRIMS/W/70, G/TRIMS/W/88 
and G/TRIMS/W/108 to which Indonesia had responded in documents G/TRIMS/W/74 and 79, G/TRIMS/100 and G/TRIMS/W/123, respectively . Additional follow-up questions had been 
circulated in G/TRIMS/W/128. 
27.  The United States was concerned with investment restrictions in the energy sector. It asked 
Indonesia about the requirement to "prioritize" the use of domestic goods and services in this 
sector, and how that requirement was being enfo rced. The United States looked forward to G/TRIMS/M/36 
 
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  receiving answers to the follow-up questions it ha d submitted prior to the previous meeting, and 
asked Indonesia about the possible timing of those responses.  
28.  The United States noted its concerns about the overall investment climate in this sector as 
these and other actions had created uncertainty in the market. Although it had tried to find a 
solution to the questions and concerns that it had raised in this Committee and bilaterally, the 
situation in the energy sector had deteriorated. In January 2014, Indonesia had begun implementing mandatory domestic processing requirements for almost 50 mineral ores, including 
nickel and bauxite. While the United States understood Indonesia's desire to move up the value 
chain, it noted that the requirement to add value in Indonesia in many instances required investment in domestic facilities.  
29.  Further, the United States understood that for a subset of metallic minerals, Indonesia had 
delayed enforcement of the domestic processi ng requirements until 2017 and would allow the 
export of those minerals in a processed, un-refined state during a three-year transitional period, provided that the companies obtained an export lic ense and paid an export tax. It appeared that 
Indonesia would condition issuance of an export lic ense on a range of factors, including whether a 
company was committed to building a smelter in In donesia. The United States requested further 
clarification from Indonesia regarding those additional requirements.  
30.  In addition, the United States understood that Indonesia had issued a revised Negative 
Investment List, which appeared to introduce furthe r investment restrictions in a number of areas, 
including mining, oil and gas. It requested an update in the Committee about these new requirements.  
31.  The United States had systemic concerns about the direction of Indonesia's trade-related 
investment measures, and would continue to seek resolution of those concerns.  
32.  The European Union recalled that the provis ions at stake had been discussed in previous 
meetings of this Committee. Indonesia's further clarifications as to the prioritisation of local 
content in its legislation covering mining products in mineral and coal reinforced EU's concerns regarding the compatibility of the measures with the WTO Agreements, including TRIMs. The 
European Union requested Indonesia to review the provisions at stake and asked Indonesia 
whether it contemplated such a review. From a broader perspective, measures had been taken over the past few years and months in the Indonesian energy and mineral resources sectors which included not only local requirements, but also, for instance, export restrictions and limits imposed 
to foreign participation, which all acted as a deterrent to foreign investment. The European Union 
invited Indonesia to consider the long-term impact of that policy, bearing in mind G20 commitments to resist and roll-back protectionist measures. 
33.  Japan recalled that it had raised points in  the previous six sessions of the Committee and, 
most recently, in the CTG. Japan noted that the Mining Law contained provisions which could be 
implemented inconsistently with the WTO Agre ement, such as production control by the 
government -- Indonesia had the ability to control production and export for national interests -- 
or local content requirements for foreign investors. Japan requested that Indonesia explain the consistency of these measures with the WTO Agreement, namely Article XI of the GATT and Article 2 of the TRIMS Agreement. Japan was also concerned about the divestment obligation to 
foreign shareholders set out under the decree wh ich regulated the implementation of mineral and 
coal mining operations under the Mining Law. Since establishment of the Mining Law, Japan, together with its industry, had persistently approached the Indonesian authorities about reviewing 
the measures concerned. Almost every effort, including at the highest level, had been made in 
order to achieve a solution through bilateral dialogue. Japan would have to seriously consider taking further steps available under the DSU if  the current situation remained unchanged.  
34.  Australia had concerns regarding ownership divestment requirements, the requirement to 
prioritise local service providers and domestic processing, restrictions on the export of raw 
materials, pressure to renegotiate 'Contracts of Work' and restrictions on obtaining approvals for 
expatriate employees. These regulations created uncertainty for foreign and Indonesian mining 
ventures operating in Indonesia and could affect investor confidence more broadly. Australia 
requested further clarification on the im plementation of these regulations.  G/TRIMS/M/36 
 
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  35.  Indonesia noted that it had provided written answers to the questions from the 
United States.1 In principle, preference to the use of goods/services was not mandatory in nature. 
Its implementation was provisional to the availability of goods and services in the domestic market either domestically produced or being imported, taking into account the price, technical 
specification, quality, quantity and time delivery. The publication of APDN Book and Master List 
was not intended to restrict imports, but aimed at supporting any investors either foreign or domestic that produced supporting goods and services in the mining, gas and oil sectors. The 
opportunity was huge and Indonesia had invited potential investors from all Members to join and 
take benefit of business potential in these sectors.  On the issue of the export ban, the capital was 
still working with interested Members to find solu tions and was in the process of revising some of 
the regulations. Indonesia was in the process of pr esidential election, and any change of strategic 
policy would need consent from the newly elected government. Indonesia requested that any 
further questions should be submitted in writing. 
36.  The Committee took note of the statements made. 
5  INDONESIA – NEWLY ADOPTED INDUSTRY LAW AND TRADE LAW - REQUEST OF THE 
EUROPEAN UNION, THE UNITED STATES, JAPAN AND CANADA 
37.  The European Union expressed its concerns about the recent Trade and Industry laws, which 
leaned towards protectionism and were potentially very trade restrictive, contributing to a high 
degree of uncertainty and hesitation among investors. Issues of particular concern were: 
i. the possibility for the Indonesian Government to impose export bans on biological 
and non-biological raw materials (Industry law) and impose restrictions on export 
and import of certain goods for national interest (Trade law); 
ii. the mandatory use of domestic products and increased use of national standards; 
and; 
iii. the use of safeguard measures, either tariff or non-tariff-measures, to protect the 
industry from international competition.  
38.  While implementing regulations would have to be issued over the next two years, the 
European Union asked Indonesia to specify the timeline for publication of such implementing 
regulations and whether they would be open to public consultation.  
39.  The United States shared the EU's concerns  about the new Industry and Trade laws adopted 
by Indonesia earlier in 2014. While those laws were vague in many respects, with implementing 
regulations yet to be written, the theme of a broad shift to a government-dominated highly 
protected economy was clear. In the context of other Indonesian measures that the Committee had examined, the implications for the TRIMS and other agreements were quite troubling. The 
Industry Law contained numerous provisions that carried forward this theme. The United States 
wished to highlight some of the key provisions: 
40.  Articles 32 and 33 established a framework for establishing export bans in the interest of 
domestic industries. Article 32 stated that in order to increase the additional value of Industry to 
strengthen and fortify the domestic Industrial structure, the Government might put a ban or restriction on natural resources exports. Article 33 stated that (1) The Government and Local Government would guarantee the availability and distribution of natural resources for domestic 
Industry. (2) In order to guarantee the availab ility and distribution of natural resources for 
domestic Industry as referred to in paragraph (1), the Government and Local Government would regulate the natural resources use in the interest of domestic Industry. 
41.  Article 84 set up broad protections for industries considered to be "strategic industries." 
Article 84(1) stated that strategic industries would be controlled by the State, while Article 84(2) defined strategic industries very broadly and vaguely as industries that: satisfied the needs that 
were important for the welfare of the people or affected the life of the people; improved or 
                                               
1 Indonesia's reply to the US fo llow-up questions was circulated after the meeting in document 
G/TRIMS/W/137 dated 15 July 2014. G/TRIMS/M/36 
 
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  produced additional value for strategic natural re sources; and/or were related to the defence and 
security interests of the state.  
42.  Article 84(3) stated that the control of the government could be carried out by controlling 
ownership, setting internal policies, and managing licensing as well as production, distribution and 
price. Article 84(4) specified how the government could control ownership: by full takeover so that 
the Government had full capital participation, by requiring joint ventures, or by restricting ownership by foreign investor. Finally, if the point of the law was not clear up to now, Article 84(5) 
gave the Government sweeping power to increase domestic product use, apparently with little or 
no restrictions on how they would accomplish this goal. 
43.  The Trade Law was equally troubling. Article 3 declared that one purpose of the regulation of 
trade was promoting Domestic Product consumption. Article 54(1)a of the Trade Law went on to 
give the Government broad power to prohibit exports or imports of goods for the national interest 
whether for national security or simply for the "public interest."  
44.  Article 54 (2) and 54(3) listed a host of reasons based on which the Government might 
prohibit exports or imports, all of them aimed at propping up a domestic industry, and all of which 
might result in a requirement that investors favoured domestic over imported goods.  
45.  Article 54(2) said the Government might bar exports or imports to ensure the fulfilment of 
domestic needs; ensure the availability of raw materials required by domestic processing 
industries; protect the sustainability of natural resources; increase the economic value of raw materials and/or natural resources; anticipate significant price increase of certain export commodities in international market; or maintain domestic price stability of certain commodities.  
46.  Article 54(3) stated that the Government mi ght restrict imports to expedite the growth of, 
establish and protect certain domestic industries; or maintain the balance of payments or balance of trade.  
47.  The United States noted that it had described the provisions of those new laws at length 
because they appeared to signal a significant re treat from Indonesia's obligations under the TRIMS 
and other WTO Agreements.  
48.  While recognising that the Indonesian Go vernment had been given two years to draft 
implementing legislation, and understanding that the drafting process had begun, the 
United States requested that Indonesia keep the Committee apprised of developments, including the anticipated date of issuing implementing regula tions and of putting those laws into effect, as 
well as provide copies of draft implementing regulations so that stakeholders, including the 
governments of interested WTO Members, could provide input.  
49.  Japan fully shared the preoccupations expresse d by the European Union and the United States 
regarding the enactment by Indonesia's legislat ure, earlier in 2014, of those two laws which 
provided the legal framework for further trade-restrictive measures.  
50.  Japan considered that Articles 26 and 54 of the Law on Trade seemed to allow the Indonesian 
authorities to control exports and imports to protect certain industries. Article 25 of the Law on 
Trade could be interpreted to mean that the Government would control prices in certain situations. Article 22 of the Law on Trade referred to setting out a requirement to use domestic products. In addition, Articles 85 to 87 of the Law on Industry  stipulated that the Government would increase 
domestic product use and that obligation would be carried out according to the domestic 
component level of each product/service shown by the value level of the domestic component.  
51.  Japan asked Indonesia whether measures under those provisions would be implemented 
consistently with GATT Articles III:4 and XI:1 as well as Article 2 of the TRIMS Agreement and 
urged Indonesia to ensure that the implementing regulations for those two laws were consistent with WTO obligations including those under the TRIMS Agreement. G/TRIMS/M/36 
 
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  52.  Canada2 was closely following developments pert aining to these two new laws and was 
particularly concerned with regards to Indonesi a's obligations under th e TRIMS Agreement, as 
these laws related to domestic content and import/export restrictions. 
53.  With regards to domestic content, Article 22 of the Trade Law stated that "the promotion of 
Domestic Product consumption […] shall be carried out through alignment by way of promotion, 
introduction or marketing and setting out a requirement to use Domestic Product". Canada asked Indonesia how it would ensure that those laws were consistent with the National Treatment 
obligations of the TRIMS Agreement. Canada expressed its concern of the potential far-reaching 
scope of that provision and asked Indonesia whether it planned to apply it across the economy or to limit its application to certain sectors or industries.  
54.  Furthermore, with regard to import/export restrictions and control of essential and strategic 
goods, Article 25 permitted Indonesia to "control  the availability of essential Goods and/or 
strategic Goods throughout the territory of the Unit ary State of the Republic of Indonesia to be in 
sufficient quantity, excellent quality and affordable price." Canada asked Indonesia to elaborate on 
this provision and the policy rationale behind it and to clarify whether measures aimed at 
"controlling" those goods could take the form of import and export restrictions. 
55.  Moreover, with regards to the definition of "essential and strategic goods," Canada noted that 
the description of those goods was due to follow in the Presidential Regulation and asked 
Indonesia whether it could provide the Committee wi th possible examples of goods that would fall 
under those two categories. 
56.  In addition, Canada noted that the Trade Law stipulated that many provisions were to be 
articulated further in a future Presidential Regulation and asked Indonesia about the timing of that 
legislation. Canada also inquired whether the bu siness community would be consulted with regards 
to the drafting of the implementing legislation and what consultation had occurred already with 
regards to the Trade Law itself. Canada finally asked whether English versions of those laws were 
available publicly and, if not, whether Indonesia planned to make an English copy of those laws 
publicly available.   
57.  Australia noted its concerns with Indonesia's import restricting policies and practices, which 
were of significant interest to Australian exporters. Australia was prepared to work collaboratively 
with Indonesia to ensure measures to implement the law were not trade-restricting. 
58.  Indonesia stated that the two laws were inte nded to support the development of industry and 
to improve the contribution of trade to national economy, taking into account Indonesia's 
international commitments in the WTO and other fo ra. Due to the system in Indonesia, the two 
laws were general in nature and the government needed to develop implementing regulations, 
either through Governmental or Ministerial Decrees  to implement the laws. It was expected that 
any strategic decision would be taken after the formation of elected new government. Indonesia 
had taken note of the concerns of Members and re quested that any specific questions be sent in 
writing. 
59.  The Committee took note of the statements made. 
6  INDONESIA – MINIMUM LOCAL PRODUC T REQUIREMENT FOR MODERN RETAIL 
SECTOR - REQUEST OF THE EUROPEAN UNION, THE UNITED STATES AND JAPAN 
60.  The European Union expressed its concern at the 80% local content requirement imposed by 
the recently adopted Regulation 70/2013, as burdensome, distorting competition, and limiting 
consumers' choice. The European Union understood that the 80% local content requirement 
already existed for franchising, while by means of Regulation 70/2013 it was extended to the 
whole retail sector, and asked Indonesia to clarify: which Regulation set out the 80% local requirement for franchising; whether there were any implementing regulations or whether 
exceptions to the rules were foreseen; whether Indonesia could provide the relevant legal texts; 
which Regulation set out the 80% local requirem ent for the whole retail sector; whether there 
                                               
2 Following the meeting, Canada submitted its qu estions in writing in document G/TRIMS/W/138 of 
15 July 2014. G/TRIMS/M/36 
 
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  were any implementing regulations; whether exceptions to the rules were foreseen; and whether 
Indonesia could provide the relevant legal texts. The European Union also noted that the 15% limitation on the number of private label goods sold would also be of difficult application for single brand retailers and asked Indonesia to clarify the objectives of this provision and how it would be 
implemented.  
61.   The United States stated that Indonesia' s Ministry of Trade (MOT) had adopted Regulation 
70/2013 concerning the Guideline on Planning an d Development of Traditional Market, Shopping 
Centre and Modern Shop in December 2013. That regulation built on requirements in previous 
MOT regulations in 2012 and 2013 (Regulations 53 and 68 of 2012 and Regulation 7 of 2013) 
related to franchises, including modern retail franchises (such as minimarkets and hypermarkets) and food establishments. Regulation 70 required, among other things: 
a. "Modern Shop may only market private-labelled and/or house-labelled products at most 
15% (fifteen percent) of stock keeping unit so ld in Modern Shop outlets." (Article 21.2) 
b. "Shopping Centre and Modern Shop shall sell domestic products at least 80% 
(eighty percent) of quantity and type of products being traded" (Article 22.1).  
62.  While these requirements applied to both do mestic and foreign companies, they seemed to 
specifically anticipate that in order for a foreign investor to establish in that sector in Indonesia, 
that investor must have acquired and sold local goods. The United States asked Indonesia how 
such a requirement was consistent with the ob ligations of the GATT and the TRIMS Agreement. 
The United States further noted that the regulation came into force in June 2014. However, investors had 2 years to come into compliance with the requirement to use local goods. The 
United States requested that Indonesia keep the Committee informed of the process for 
implementing Regulation 70.  
63.  Similar regulations applied to franchise esta blishments. Ministry of Trade Regulation 53/2012 
required that "Franchisors and franchisees had to use domestically produced goods and/or services 
for at least 80% of their raw materials, business equipment and sales." That local sourcing requirement was also reflected in Regulations 68/2012 and 7/2013. The United States asked 
Indonesia how such a requirement was consistent with the obligations of the GATT and the TRIMS 
Agreement. 
64.  Japan shared concerns about the trend in Indonesia towards imposition of local content 
requirements which could be implemented inconsistently with WTO rules. Trade Ministry 
Regulation No 70/2013, in particular, obliged sho pping centres and modern retail shops to ensure 
80% of products in their outlets were domestic. Japan had doubts about the consistency of that Regulation with GATT Articles III:4 and Article 2 of  the TRIMS Agreement, and would appreciate it 
if Indonesia could present its view on that matter. 
65.  Indonesia stated that the retail sector was crucial for economic empowerment, especially for 
millions of Small and Medium scale Enterprises (SMEs) in Indonesia. The Government applied a 
zoning policy for any investor interested in open ing a new modern retail business. It was intended 
that such establishment would support, not undermine small scale trading or traditional markets. The policy was commonly practiced by Members. The preference given to SMEs to supply goods to modern retail was subject to the SMEs' ability to comply with the business requirements set by the 
modern retail. Indonesia noted the concerns of Members but requested that questions were 
provided in writing.  
66.  The Committee took note of the statements made. 
7  NIGERIA – CERTAIN MEASURES TAKE N IN THE "ACT TO PROVIDE FOR THE 
DEVELOPMENT OF NIGERIAN CONTENT IN TH E NIGERIAN OIL AND GAS INDUSTRY" OF 
APRIL 2010 - REQUEST OF THE EUROPEAN UNION AND THE UNITED STATES 
(G/TRIMS/W/89) 
67.  The Chair informed Members that that item had been previously considered at Committee 
meetings held on 3 October 2011, 4 May and 1 October 2012 and 20 April and 4 October 2013. 
The Chair referred to document G/TRIMS/W/89 containing questions from the United States. G/TRIMS/M/36 
 
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  68.  The United States recalled that it was almost three years since it had first drew Members' 
attention to certain measures which appeared to require the use of local content in Nigeria's oil 
and gas industry. The United States had posed written questions to Nigeria in September 2011 in document G/TRIMS/W/89, and had described its understanding of the measures in a meeting in 
October 2011. At the time Nigeria had stated that it had not received any instructions from capital, 
nor answers to the US questions. Although the is sue had been raised at each subsequent meeting 
of that Committee, Nigeria had still provided neither a formal response, nor any substantive 
engagement. The United States had raised this issue several times in the CTG, in light of the 
systemic concerns raised by Nigeria's failure to address the US factual questions. The United States understood that responses to questions in WTO committees could be delayed and that questions in the Committee touched on technical issues that might require consultation with 
regulators. However, the WTO Committee system provided a forum to gain a basic understanding 
of the trade policies of other Members, and to raise concerns outside the context of dispute settlement. The United States urged Nigeria to use the Committee to clear up any 
misunderstandings and to explain how Nigeria viewed the relationship of its measures to the 
obligations of the TRIMS Agreement. 
69.  The European Union recalled that it was still waiting for written answers to a list of previously 
submitted questions related to the law and its local content requirement, in particular as to its 
compatibility with the TRIMs Agreement, GATT 1994 and the GATS. This issue had been discussed in the context of regular TRIMS Committee meetings as well as CTG meetings. At the last CTG meeting, Nigeria had observed that "the Local content requirements as well as government 
procurement procedures are applied in the most transparent ways. All competitors including 
foreign operators are benefitting from the rules. We urge members to explore bilateral solutions with us". The European Union failed to see how such a statement addressed the questions raised 
and reiterated its interest in receiving written replies which could facilitate further discussions.  
70.  The European Union had repeatedly expressed its concern about the review of Schedule A. 
That review was meant to comprise the list of detailed local content requirements per good or 
service, and had been originally foreseen by the applicable legislation for spring 2012. Almost a 
year later, no such review had yet taken place. The European Union asked Nigeria whether it could 
specify the date of that review and clarify the manner in which it was to be carried out. It also noted that an Amendment Bill was pending before  the National Assembly which could provide an 
opportunity to review certain provisions of the Act, including Schedule A, and could address 
questions beyond the issue of WTO compatibility. The review could look more closely at whether 
the legislative scheme, and especially its local co ntent requirements, provided the appropriate tool 
to achieve the stated goal of enhancing domestic  capacity in the oil and gas industry. Issues 
related to the productive capacity and supply possibilities of the relevant Nigerian sectors ought to be addressed in that framework, as well as some apparent distortions introduced by the law, 
notably the fact that the requirements in Schedule A favoured pure agency/intermediation over 
genuine local investments. 
71.  Australia asked Nigeria to explain how the preferential treatment accorded to local goods and 
services in the "Act to provide for the developmen t of Nigerian content in the Nigerian oil and gas 
industry" was consistent with Nigeria's national treatment obligations under the GATT . In 
particular, Australia noted that Section 11(1) of the Act established minimum percentages of Nigerian content in goods, services and investment for any project in the Nigerian oil and gas 
industry. Further, Section 7 of the Act required  operators to submit a Nigerian Content Plan 
demonstrating compliance with the Nigerian content requirements.  
72.  Japan shared the systemic points of view ex pressed by the previous speakers and encouraged 
Nigeria to expeditiously provide its clarification in a written form to meet the established practice 
in the WTO. 
73.  Nigeria assured the Committee of its commitment to its WTO obligations as evidenced by the 
notifications submitted to enhance the transparency mechanism. As stated in previous meetings, 
the Act in question provided a framework for the ut ilization of services in the Nigerian oil and gas 
industry. It encompassed activities connected with  the exploration, development, exploitation, and 
sale of Nigerian oil and gas resources, including upstream oil and gas operations. The 
implementation of the Act provided for a competitive, transparent, non-discriminatory process and 
international standards and ensured that all investors, whether local or foreign, had equal G/TRIMS/M/36 
 
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  opportunities. Therefore, all foreign oil and gas co mpanies duly registered and operating in Nigeria 
fully benefited from the provisions of the Act.  
74.  The delegate of Nigeria provided a prelim inary response to the questions raised by the 
European Union as follows:  
 As to whether there was a specific date for the review of the schedule  
75.  The Act had two in-built mechanisms to deal with the situation where local capacity was 
inadequate to meet the target in the schedule. (i) Section 102 of the Act stated inter alia  that 
"Subject to the approval of the Minister, the Board shall conduct a review of the schedule to this 
Act at such intervals as it may determine but not later than every two years..." (ii) Section 114 of the Act also stated inter alia  that "Notwithstanding the provisions of sub-Section (1) of this 
section, where there is inadequate capacity to an y of the targets in the schedule to this Act, the 
Minister may authorise the continued importation of the relevant items and such approval by the 
Minister shall not exceed three years from the commencement of this Act."  
 As to whether consultations were foreseen involving operators  
76.  There had been on-going consultations with the stakeholders and operators in the Oil and Gas 
industry in Nigeria.  
 As to whether an assessment of the productive  capacity in Nigeria had taken place that 
would allow the country to evaluate whether the targets for Local Content set in the 
Schedule were feasib le, or should be reviewed for now  
77.  There was provision for assessment of the productive capacity in Nigeria as spelt out in 
Section 102 of the Act that the Nigeria Content Development and Monitoring Board (NCDMB) had 
to review the schedule every two years so as to en able the National Assembly amend the Act as it 
might be appropriate. This was similar to the concerns raised by stakeholders which the Board would take into consideration in the review of its operation.  
78.  Finally, Nigeria called on the European Union,  the United States and all concerned delegations 
to engage in bilateral discussions and dialogue to  address any issues that might be of concern to 
them on the Nigerian Content Act and other trade related matters. 
79.  The Committee took note of the statements made. 
8  RUSSIA – LOCAL CONTENT REQUIREMENTS FOR AGRICULTURAL EQUIPMENT - 
REQUEST OF THE EUROPEAN UNION AND THE UNITED STATES (G/TRIMS/W/116); (G/TRIMS/W/130) 
80.  The Chair noted that questions had been posed to Russia in G/TRIMS/W/116, to which Russia 
had responded in document G/TRIMS/W/130.  
81.  The United States recalled its concerns about reports that RosAgroLeasing (RAL), a state-
owned leasing company created to supply agricu ltural equipment to farmers in Russia, was 
imposing a local content requirement for that equipment. The United States appreciated Russia's responses to its questions about the program and, in particular, the indication that, consistent with 
its Working Party Report, Russia had abandoned subsidization of manufacturing in that sector. The 
United States was reviewing resolution No. 1432 of 27 December 2012, and might have questions at a future meeting. Noting Russia's confirmation that the Russian Government was both the owner and regulator of RAL, the United States  asked Russia whether there were any plans to 
privatize that entity.  
82.  Turning to Russia's assertions regarding the lease, the United States took note of the 
following statements in Russia's answers: 
a. "the lessor shall acquire property, specified by the lessee, in its ownership from a 
particular seller and provide to the lessee this property in temporary possession and use for a fee;" and, G/TRIMS/M/36 
 
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  b. "the leasing agreement is specified by the le ssee. Exact features of such property are 
specified by the leasing agreement." 
83.  The United States requested Russia to confirm that there was no difference in the fee or other 
terms of leasing agreements dependent whethe r or not the leasing agreement pertained to 
Russian manufactured agricultural equipment. It also requested that Russia provide a breakdown 
of the brands of agricultural equipment leased by RAL during the period 2013-2014. Finally, it 
requested that Russia provide samples of leasing agreements signed by RAL involving non-Russian 
manufactured agricultural equipment.  
84.  The European Union reiterated its interest in better understanding how the system functioned. 
While it had received some clarification on the operation of RAL, there were still questions 
concerning the state subsidy scheme under Resolution N°908 of 11 October 2013 where 15% of 
the sales price of agricultural machinery was subsidies for entities performing some specific 
production operation in Russia. The European Union also noted its concerns with regards to Resolution N°1432 of 27 December 2012 where a condition for receiving subsidies for the 
production of agricultural machinery was the fact that the company was established since more 
than 3 years in Russia. 
85.  Japan expressed its continuing systemic intere st in the local content requirement by the state-
owned leasing company "RAL" for agricultural equipment. 
86.  Russia was surprised by the concerns of some Members regarding certain support programs of 
Russia in agriculture and agricultural machinery. Regarding the EU concern that a Russian support 
program required a recipient to be a legal entity established more than 3 years ago, there was no 
reasonable basis for the European Union to be concerned with such a criterion for a subsidy. 
Should Members wish to provide written questions, Russia would provide written responses in due course. Russia was always open for bilateral discussions.  
87.  The Committee took note of the statements made. 
9  RUSSIA – CERTAIN MEASURES RELATING TO INDUSTRIAL ASSEMBLY - REQUEST OF 
THE EUROPEAN UNION, THE UNITED STATES AND JAPAN 
88.  The Chair informed Members that in the week prior to the meeting, and following the airgram, 
the United States had submitted written questions in document G/TRIMS/W/134. 
89.  The United States recalled that, at prior meetings, Members had expressed concerns about a 
vehicle recycling fee imposed by the Russian Fede ration, and had raised questions about how the 
discriminatory application of the fee could be reconciled with Russia's WTO commitments. The 
United States understood that, through Resolution No. 1291, dated December 25 2013, Russia had begun imposing the fee on Russian automobile producers that participated in the industrial 
assembly program, apparently as an effort to remove the discriminatory aspect of the vehicle 
recycling fee. However, three weeks after that  Resolution, Russia had adopted a number of 
resolutions that provided financial support for certain types of expenses to Russian automobile 
producers that participated in the industrial assembly program. Those programs were:  
a. Resolution 29 of 15 January 2014 (support for expenses related to research and 
development activities and tests); 
b. Resolution 30 of 15 January 2014 (support for expenses related to energy efficiency); 
c. Resolution 31 of 15 January 2014 (support for warranty expenses related to complying 
with Euro-4 and Euro-5 emissions standards); and 
d. Resolution 32 of 15 January 2014 (support for expenses related to maintaining certain 
employment levels). 
90.  The United States stated that those new benefits were provided to the same domestic 
companies that had recently been required to pay the recycling fee and requested that Russia 
explain whether those benefits were intended to  compensate certain dome stic manufacturers for G/TRIMS/M/36 
 
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  the new recycling fee. According to the United States' understanding, participation in the industrial 
assembly program was contingent on the use of domestic content in the manufacture of automobiles. Therefore, because participation in the assembly program was a condition for receipt of the new benefits, the United States was concerned that those support programs might likewise 
be contingent on the use of domestic content. The United States further requested that Russia 
describe who could receive support under those resolutions, and the conditions for its receipt, as well as whether automobile manufacturers that used imported inputs were eligible to receive 
support under the resolutions listed above and whet her, in case an automobile manufacturer used 
imported inputs, there was a threshold, by volume  or value, above which that manufacturer would 
be disqualified from receipt of support under thos e resolutions. Finally, in case the receipt of 
support under those resolutions was limited to Russian automobile producers, how the 
determination was made whether an automobile producer was considered to be Russian. 
91.  The European Union shared US concerns about the resolutions adopted on 15 January 2014 
that provided support for certain types of expenses to Russian automobile producers that 
participated in the industrial assembly program. Those programs were: Resolution 29/2014 - 
support for expenses related to research and development activities and tests; Resolution 30/2014 - support for expenses related to energy efficiency; Resolution 31/2014 - support for warranty 
expenses related to complying with Euro-4 an d Euro-5 emissions standards; and Resolution 
32/2014 - support for expenses related to maintaining certain employment levels. It noted that participation in the industrial assembly program was contingent on use of domestic content in the manufacture of automobiles and expressed its conc ern that those support programs might likewise 
be contingent on use of domestic content. It requested Russia to describe, for each of the 
programs listed above, who could receive the support, and the conditions for its receipt, and to address the following questions: 1. whether auto mobile manufacturers, who did not produce under 
the assembly regime, were eligible for the subsidy program mentioned above; 2. whether, in case 
an automobile manufacturer used imported inputs , there was a threshold, by volume or value, 
above which that manufacturer would be disqualified from receipt of support under those 
resolutions; 3. how, in case receipt of support under those resolutions was limited to Russian 
automobile producers, the determination was ma de about whether an automobile producer was 
considered to be Russian. 
92.  Japan recalled its strong interest in monitoring Russia's implementation of WTO commitments 
in the automotive sector, particularly on the local-content requirement to obtain preferential 
treatment imposed on companies which engaged themselves in automobile production and assembly. Japan noted that, on 15 January, Russia had adopted a number of resolutions that 
provided financial support for certain types of expenses to Russian automobile producers that 
participated in the industrial assembly program. Japan understood that the automobile manufacturers in Russia which could receive the support were identical to the companies which 
had accepted the local-content requirement to obtain  preferential tariffs in their agreements with 
the Ministry of Economic Development under the "Auto Investment Program". Japan expressed its 
concern about the industrial assembly program as that might enable the participating companies to receive subsidies in exchange for local-content requirements. Japan invited Russia to explain its 
view on the consistency of the measures at issue with the relevant WTO agreements. 
93.  Russia noted that the oral description provided by the European Union with regard to certain 
support programs recently adopted in Russia for domestic car manufacturers was almost identical 
to the one contained in the written questions of the United States: 
 First program - support for expenses related to research and development activities and 
tests; 
 Second program - support for expenses related to energy efficiency; 
 Third program - support for warranty expenses related to complying with Euro-4 and Euro-5 
emissions standards; and 
 Fourth program - support for expenses related to maintaining certain employment levels. 
 
94.  Russia noted that such programs were quite commonly used by many Members and expressed surprise at the EU concerns that those programs in Russia were contingent upon use of 
domestic over imported goods. Russia saw no basis for such claims. Should the European Union 
and other Members wished to provide written ques tions in that regard, Russia would respond in 
due course.  G/TRIMS/M/36 
 
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  95.  The Committee took note of the statements made. 
10  UNITED STATES – CERTAIN LOCAL CONTENT REQUIREMENTS IN SOME OF THE 
RENEWABLE ENERGY PROGRAMS – REQUEST OF INDIA (G/TRIMS/W/117); (G/TRIMS/W/129/REV.1) 
96.  The Chair informed Members that India had submitted questions on this matter in document 
G/TRIMS/W/117, to which the United States had responded in document G/TRIMS/W/129/Rev.1. 
97.  India recalled the questions raised in document G/TRIMS/W/117 pertaining to renewable 
energy programs of the United States. The United States had been requested to provide details as 
to which of the state or regional or local level renewable energy programs provided benefits, including incentives or additional incentives or rebates or credit contingent upon compliance of domestic content requirements. Questions had been also raised on certain specific renewable 
energy programs of Michigan, California LADWP,  California SGIP and Texas Austin Energy.  
98.  India noted that the US response had provided some information on the four specific 
renewable energy programs and requested the United States to provide complete answers to all 
the questions raised. India wished to reemphasiz e certain questions that had either not been 
answered by the United States or had been partially answered.  
 Michigan: Renewable Energy Credits under the Clean, Renewable and Efficient Energy 
Act (Public Act 295) 
99.  India noted that, as per its understanding, on reading the response, it was apparent that the 
United States acknowledged that there was a clear domestic content requirement in the Michigan renewable energy program, evidenced from the following excerpt: "… An IREC earned on this basis 
is equivalent to 1/10 of a REC, although pro rata IRECs can be earned for energy systems based 
on the dollar amount of equipment and material s manufactured or assembled in the State. ..."  By 
employing those local content requirements, which were TRIMS inconsistent and discriminated 
against imported products, those requirements also prevented US customers from accessing the 
best and the most inexpensive technology and prod ucts available elsewhere. India requested that 
the United States provide a response to questi ons 2, 3 and 6 that had not been answered, and 
noted that the US response provided a web link for further information which opened to an error 
message.  
 California: Los Angeles Department of Water and Power (LADWP) – Solar Photovoltaic 
Incentive Program 
100.  India understood from the US response that the United States acknowledged that there was 
a clear domestic content requirement in the LADWP renewable energy program, evident from the following excerpt: "…..Additionally, the Los Angeles Manufacturing Credit (LAMC) provides an 
additional incentive payment for PV modules manuf actured in the City of Los Angeles that have 
confirmed LADWP Solar Incentive Program Reservatio n. To qualify for the LAMC and be considered 
locally manufactured, a minimum of 50% of the components of the finished PV modules or 
qualifying equipment must have been manufactu red and/or assembled within the city of Los 
Angeles. …. " Those local content requirements were TRIMS inconsistent, discriminated against 
imported products and prevented US customers fr om accessing the best and the most inexpensive 
technology and products available elsewhere. Th e US response had provided general information 
but had not provided specific answers to India's questions. India mentioned, by way of example, 
its question whether LAMC would be provided to the applicant in case the requirements indicated in the underlined text of the question were not fulfilled jointly or separately; which criteria were 
used by the LADWP in the determination of whether the manufacturing process or equipment 
qualified for the LAMC; how it would be de termined whether the PV modules had been 
manufactured within the city limits of the City of Los Angeles; what was the amount of incentive 
payment available for each applicant and what was the financial contribution made on that account 
by the LADWP for the previous three years. Those questions, among others, had not been 
answered. Further, the US response provided a web link that opened to the general website of LADWP, from which India had not been able to extract the requested information. India requested 
that the United States provide all the information requested in the questions directly to India. G/TRIMS/M/36 
 
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   California: Self Generation Incentive Program (SGIP) 
101.  Similarly, India stated that the United Stat es had provided only general information on the 
questions raised by India and that the web link provided opened to an error message. India requested that the United States provide direct  answers to all the specific questions raised 
concerning that program.  
 Texas Austin Energy: Commercial Solar PV Performance Based Incentive Program and 
Residential Solar PV Rebate Program 
102.  The United States had stated that the loca l content based incentive had been subsequently 
withdrawn from the guidelines for qualification under one of the programs, namely D1, but the 
United States had not answered India's questions on the other program D2. India asked the United States to provide complete information on all the specific questions raised under the program for 
both D1 and D2. It further noted that the web link provided in the question could not be accessed 
as it led to an error page and requested that th e United States provide the requested information 
directly to India.  
103.  India finally stated that it would have some further questions on the programs mentioned, 
which it would submit in writing.  
104.  The United States expressed its appreciation to India for its questions regarding the four 
programs and noted that it had provided replies to India's questions while it apologised for any 
web link problems. It noted that there was voluminous and complex information about how those programs calculated particular benefits for retail, individual customers and credits they could get in their energy bill for use of renewable sources of  energy. Any problems of broken web links would 
be looked at and corrected so that India could review the full details of those programs. At least 
one of those programs had never been used and had been eliminated, while another one had also never been used and in light of that it was very difficult to provide some of the detailed 
information that India was requesting because those questions were, at that point, hypothetical as 
those two programs were never in effect.  
105.  The United States also noted that other programs provided benefits either to domestically 
manufactured products or also to domestically assembled but foreign manufactured products. 
Those programs are thus not limited to US goods. While that information was set forth in great detail, including the qualification requirements for those programs, the United States would look into correcting any problems with web links. In the meantime, it looked forward to receiving 
India's additional questions. 
106.  The Committee took note of the statements made. 
11  UNITED STATES – DOMESTIC CONTENT REQUIREMENT IN PROCUREMENT BY WATER 
UTILITIES IN THE US – REQUEST OF INDIA (G/TRIMS/W/121) 
107.  The Chair noted that India had submitted questions on this matter in document 
G/TRIMS/W/121. 
108.  India recalled the trade-related and system ic concerns regarding procurement by water 
utilities in South Carolina, Pennsylvania, West Virginia and some New England states that had 
been mandating domestic content requirements with regard to the supply of ductile iron pipes and fittings for use in water projects which were raised in document G/TRIMS/W/121 in April 2013. 
India had sought detailed information on the tenders of the water utilities mentioned above as 
domestic content requirements, such as the use of domestically manufactured ductile iron pipes and fittings, were a prerequisite for eligibili ty to tender. India understood those tender 
requirements to be TRIMS-inconsistent.  
109.  India expressed its disappointment in not ha ving received a response, noting that in the 
previous two meetings of the Committee the United States had asked India to explain "… whether , 
in its view, notwithstanding Article III:8 of the GATT, procurements of the nature described by 
India were nevertheless subject to Article III:4 of the GATT and hence to the TRIMS Agreement. …" India reiterated that the purpose of its questions was to understand the US programs in the G/TRIMS/M/36 
 
- 17 - 
 
  spirit of transparency and asked the United States to confirm whether its view was that the 
programs mentioned above were covered by the exception contained in Article III:8(a) and thus Article III:4 was not applicable. India asked the United States to confirm whether procurement of ductile iron pipes and fittings under those programs was procurement by governmental agencies of 
products purchased for governmental purposes and not with a view to commercial resale or with a 
view to use in the production of goods for commercial sale. In case the answer would be positive, India wished to learn from the United States how the four qualifier obligations set out in Article 
III:8(a) were met.  
110.  India concluded that unless the United States provided details about the program, no 
forward movement in discussion under that important issue would be possible and the purpose of discussions in the Committee's meeting would be defeated.  
111.  The United States recalled that in a prior meeting India had described all of those programs 
as "procurement" and the United States had requ ested India to explain whether, in its view, 
notwithstanding Article III:8 of the GATT, procur ement of the nature described by India was 
nevertheless subject to Article III:4 of the GATT and hence to the TRIMS Agreement. India had 
helpfully explained that it had developed a legal analysis on that issue which it could discuss either bilaterally or with the Committee as a whole. Th e United States considered that Members as a 
whole could benefit from that explanation and encouraged India to provide its analysis to the 
Committee. The United States noted that while it had also welcomed India's invitation to discuss the legal issue further bilaterally, to that date, India had not followed up on that offer. The United States remained available to help clear up  misunderstandings and enable further progress.  
112.  India clarified that it used the word 'procurement' because pipes were being procured but all 
'procurement' did not mean 'government procurement' and that was the precise question which 
India was raising. In India's view, the requ irement of local content in the tenders was 
discriminatory, it was a violation of Article III of the GATT and hence a violation of the TRIMS 
Agreement. Consequently, it was relevant for discussion within the TRIMS Committee. If the United States' position was that the requirement for procurement was a 'government procurement' 
then the follow-up question of India was that for anything to qualify as 'government procurement', 
it had to fulfil four conditions: (1) the procurement should be made by a government agency; (2) the procurement should be for governmental purpose; (3) the procurement should not be for commercial resale; (4) it should not be used as input for the production of goods for commercial 
sale. If the United States believed that that procurement was covered under the Article III:8 
exception, then India needed that answer fr om the United States. The answer that the 
United States actually gave was reversing the discussion. The Indian delegate stated that India did 
not consider that procurement to be government procurement. India considered it to be a violation 
of Article III of the GATT. If the United States was of the position that that was government procurement, India needed an explicit answer to that effect.  
113.  The United States expressed its surprise as it considered that India had changed its position 
with respect to the program. India had previously informed the United States that it considered 
that program to be a government procurement program which was nevertheless covered by the TRIMS Agreement through a legal theory India would provide to the Committee. India had not 
done so and seemed to have changed the fundamental basis for its allegation. With respect to 
whether the program was government procurement or not, this matter should be better taken up in fora better suited to discuss the scope of government procurement.  
114.  India explained that it had never characterised the program as government procurement. 
India had only talked about procurement but never used the word government procurement. 
India's question to the United States was whether, in the US view, that procurement was 
government procurement or not. 
115.  The Committee took note of the statements made. 
12  URUGUAY – LOCAL CONTENT REQUIREMENTS FOR WIND POWER EQUIPMENT – 
REQUEST OF THE UNITED STATES (G/TRIMS/W/125); (G/TRIMS/W/132) 
116.  The Chair noted that the United States had submitted questions to Uruguay in document 
G/TRIMS/W/125, to which Uruguay had responded in document G/TRIMS/W/132. The G/TRIMS/M/36 
 
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  United States had submitted last week, and afte r the airgram, follow-up questions in document 
G/TRIMS/W/135. 
117.  The United States recalled that it had drawn the attention of Members to Decree 403/009 
(24 August 2009), signed by the President of Urug uay, and issued by the Ministry of Industry, 
Energy and Mining. That decree addressed bids to  construct wind farms in Uruguay, and provided, 
inter alia , at Article 2, part III: "For a bid to be considered, the domestic inputs that constitute the 
investment must reach at least 20% of the total amount of the investment made for the 
construction of the wind farm, regardless of the infrastructure work necessary for their insertion in 
the energy grid. The bidding terms and conditio ns will establish a bonus mechanism at the 
comparative price of the incorporation of local inputs above the 20% level."  
118.  The United States stated that Uruguay's responses in document G/TRIMS/W/132 had raised 
further concerns about the use of local content requirements in connection with investments in 
Uruguay and asked the Government of Uruguay to confirm whether Decree 403/009 imposed a 
20% or 35% local content requirement on investment in Wind Farms in Uruguay, as the 
description of the methodology for calculating local content, which was provided by Uruguay, 
appeared to establish a 35% minimum local cont ent threshold while the Decree referred to a 20% 
threshold. The United States also asked Urugua y, following its response that the procedure 
established by Decree 403/009 had been fully completed and no new contracts would be issued 
pursuant to that decree, to confirm whether any other decrees had been issued that imposed local content requirements in the renewable energy sector and whether Uruguay foresaw the adoption of local content requirements in sectors other than renewable energy.  
119.  Uruguay confirmed that Decree 403/009 required a 20% minimum of national content, while 
the reference to 35% threshold did not relate to a percentage of local content in investments but 
was part of the Methodology of Assessment of Na tional Content of Investment (CNI). In such 
cases, in order to determine whether capital goods, included in a particular venture or investment 
were national or nor, it sufficed to reach 35% of local content to be computed as 100% national. Uruguay further confirmed that three other Exec utive Decrees had been approved urging UTE 
(Administración Nacional de Usinas y Trasmisiones Eléctricas) to develop competitive procedures 
for acquisition of wind source energy (Dec rees 159/011 and 424/011) and photovoltaic solar 
source (Decree 133/013) generated by private firms ei ther of national or foreign capital and that in 
each case the same requirements for national content had been included as in in Decree 403/009. 
There were no other local content requirements in the energy sector. 
120.  The Committee took note of the statements made. 
13  OTHER BUSINESS  
13.1  India - certain preferences to dome stically manufactured electronic goods 
121.  The European Union recalled that it had raised this issue in two previous meetings, in 
October and April 2013, and following India's request, had circulated written questions in 
document G/TRIMS/W/133 dated 16 December 2013. It reminded India that it was still waiting for 
answers and looked forward to receiving such replies as soon as possible.  
122.  India noted that as that item was not included in the agenda contained in the airgram, it did 
not have detailed information but could report that a new policy had been issued in 
December 2013. It would provide additional information at the next meeting.  
123.  The Committee took note of the statements made. 
14  DATE OF THE NEXT MEETING 
124.  The Chair informed Members that the next  scheduled meeting of the Committee would be 
held on Monday, 6 October 2014. In order to provide Members with ample opportunity to prepare 
for that meeting, the Secretariat would issue an annotated draft agenda three weeks in advance of 
the meeting; i.e. by Monday, 15 September 2014. That annotated draft agenda would contain the 
proposed agenda for the meeting including all Members' requests for items to be placed on that agenda. Members' requests to place any item s on the annotated draft agenda should be G/TRIMS/M/36 
 
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  communicated in writing to the Secretariat by close of business on Wednesday, 
10 September 2014. The annotated draft agenda would be open to Members' comments until close of business on Monday, 22 September 2014. In ad dition, Members wishing to circulate documents 
should do so by close of business on Monday, 22 September 2014 so that they could be reflected 
on the airgram. The airgram convening th e meeting would be issued on Friday, 
26 September 2014.  
125.  The Committee took note of the information. 
15  ELECTION OF OFFICERS 126.  The Committee elected Mr Victor Echevarria Ugarte (Spain) as Chairperson of this 
Committee for 2014.  127.  The Chair recalled that on 5 June 2014, he had sent a fax to all Members informing them 
that he intended to consult Members regarding the election of a Vice-Chairperson at the meeting 
to be held on 20 June. As of the day of the meeting, the Chair had not received any clear expression of interest in the Vice-Chairmanshi p from any delegation. Given that the Rules of 
Procedure required the Committee to elect a Vice -Chairperson, the Chair proposed that the new 
Chairperson continued to explore that issue with Members.  The Committee so agreed.  
128.  The meeting was adjourned. 
 
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