RESTRICTED  
  
G/TRIMS/M/34  
 
19 June 2013  
(13-3187)  Page: 1/14  
Committee on Trade-Related Investment Measures    
 
MINUTES OF THE MEETING HELD ON  
30 APRIL 2013 
CHAIRPERSON: MR JOSE ESTANISLAU DO AMARAL (BRAZIL) 
Note by the Secretariat 
1. The Committee on Trade-Related Investment Measures (the "Committee") met on 
30 April 2013. The Committee adopted the agenda contained in WTO/AIR/4118. 
 1  BRAZIL - CERTAIN LOCAL CONTENT PROVISIONS IN THE TELECOMMUNICATIONS SECTOR  
2. The Chair informed Members that this item, requested by the European Union, Japan, and 
the United States, had been on the agenda since May 2012. Questions were posed to Brazil in 
G/TRIMS/W/93 and G/TRIMS/W/107, to which Brazil responded in documents G/TRIMS/W/99 and G/TRIMS/W/113, respectively. 
 
3. The United States reiterated its concern that ANATEL, Brazil's telecom regulator, issued 
mobile service licenses last year with stringent local content requirements. Compounding its 
concern was a quote from Minister Bernardo that the rules for a new auction for commercial 
mobile services in the 700 MHz band would include a requirement for the use of national technology. It urged Brazil to reconsider making discriminatory content requirements part of this next bid.  
 
4. Japan expressed concern that the winning bidders of the auction in the 450 MHz and 
2.5 GHz bands were required to commit to purchasing goods, products, equipment and systems 
for telecommunications and data networks with national technology, and to ensure 70% local 
content in infrastructure deployment after a certai n period. Japan questioned how this preferential 
treatment of locally produced equipment could be implemented consistently with Article 2 of the 
TRIMs Agreement and GATT Article III:4. It also asked Brazil to clarify whether similar 
requirements would be imposed for the auction in the 700 MHz spectrum later this year.   5. The European Union also voiced concern re garding Brazil's announcement to require local 
content in the 700 MHz auction, and on 19 strategic sectors including information communication 
technologies (ICT). These measures directly impacted foreign operators. In its replies to US questions on last year's 2.5 GHz band and 450 MHz band auctions, Brazil only provided references 
to the applicable laws and the relevant Rule of the Ministry for Science, Technology and 
Innovation; it did not explain its definition of "national technology".   
6. Brazil welcomed all the follow-up questions posed and stated that was open to discussing 
these issues and to answering questions. He asked that questions posed at this meeting be 
submitted in writing.  
7. The Committee took note of the statements made. The Chair urged Members to submit 
questions and responses in writing. 
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  2  BRAZIL – TAX PREFERENCES LINKED TO LOCAL CONTENT CONDITIONS IN SEVERAL 
SECTORS  
8. The Chair informed Members that this item was placed on the agenda by the 
European Union, Japan and the United States, which had circulated questions to Brazil in 
document G/TRIMS/W/118. 
9. The European Union had raised concerns at the October 2012 meeting about programmes, 
particularly in the automotive sector, that granted tax benefits to companies that met certain local 
content requirements. The Act of 17 Septembe r 2012 that introduced the programme in the 
automotive regime foresaw a comparable regime for telecommunication network equipment, certain digital goods, and semiconductors and relate d goods. Three days later, the Brazil issued a 
similar executive measure for the fertilizer sector. The EU was concerned that the law of 
September 2012 may be part of a policy for the broad use of indirect taxes to afford protection to 
domestic goods. Further, the Government recently announced the launch of 19 new sector strategic agendas, which appeared to include indirect tax exemptions linked to local content. Of 
particular concern were plans to introduce a special tax regime for the chemicals sector known as 
"Repequim", which appeared to be modelled on programmes mentioned in the questions posed for this meeting. The EU called on Brazil to refrai n from adopting or implementing measures which 
discriminated against imported goods using indire ct taxes. Previously posed questions on the 
consistency of the Brazilian measures with  the TRIMs Agreement remained unanswered. 
10. The United States asked for an explanation of Brazil's overall policy in this area. It shared 
concerns about the proliferation of tax prefer ence programmes whereby the tax on investments 
was partially forgiven contingent on the use of local content. In particular, Law 12715 pertaining to 
telecommunications equipment, in conjunction with the previous agenda item, would restrict imports of a large number of products in a sector in which investors were dependent on equipment 
that had proven to function seamlessly within their networks. It sought information about Portaria 
No. 87, issued on 10 April, which exempted from consumption taxes smartphones meeting certain requirements, including that they contain a pre-loaded package of locally developed applications. 
This tax exemption would lead to a price reduction of up to 30% for consumers.  
11. Japan voiced systemic concerns regarding the INOVAR-AUTO programme for the automotive 
sector in Brazil. After announcing the programme  in April 2013, Brazil promulgated Decreto 7819 
which established specific conditions for companies to benefit from tax-reduction incentives for 
industrial products from 2013 to 2017. Given that these measures were envisaged to protect 
domestic industry, they could be implemented in consistently with Articles I and III of GATT 1994 
and Article 2 of the TRIMs Agreement. Japan sought clarification about these measures, and 
expressed concern about Brazil's recent use of indirect taxes in various sectors to support 
domestic manufacturing and exports.   
12. Australia had expressed its systemic and commercial concerns about Brazilian measures 
designed to assist the automotive sector, most recently at the November 2012 Council for Trade in 
Goods meeting. The original measure, announced in September 2011, effectively established eligible beneficiaries based on producers establishing a manufacturing presence in the Brazilian 
market and meeting local content requirements. Th is measure provided the framework for whether 
an automotive manufacturer qualified for the tax exemption programmes, including under the recently announced tax regime for motor vehicl es (the "INOVAR-AUTO" regime). Rather than 
being a temporary measure, Brazil had developed further automotive assistance programmes 
deriving from this original measure. Australia was concerned that Brazil was broadening its use of indirect taxes with local content requirements to other goods and sectors, which appeared to 
entrench a discriminatory tax system against imported goods. 
 13. Korea shared the concerns expressed by the previous speakers and doubted that Brazil's tax 
preference system linked to local content was WTO-consistent. Korea was concerned that Brazil 
had expanded its tax preference system to othe r sectors, including telecommunications and semi-
conductors, in addition to the automotive sector. The Illustrative List of the TRIMs Agreement clearly stipulated that local content requirements in investment measures were not WTO-
consistent. While each WTO Member had a sovereign right in tax policy, it should respect 
international rules and principles. Korea urged Brazil to bring its measures into conformity with the WTO rules. 
 G/TRIMS/M/34 
 
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  14. Brazil stated it was important to shed light on the relevant context for the recent legislation 
related to the technology-intensive sectors of the economy. The Brazilian Government was 
committed to fostering innovation, streamlining investment and promoting sustainable development. It had taken steps to simplify the fiscal system and to improve conditions for the 
development of an economy based on technology, know-how and a well-qualified workforce. Each 
of these measures had unique aspects for they a ttempted to facilitate investments in different 
sectors of the economy, each with its own structural challenges. These measures were meant to 
either provide adequate conditions to producer s committed to energy efficiency and sustainable 
development or to reduce costs throughout the production chain in sectors with high upfront costs. Brazil considered that the measures were consistent with the WTO Agreements and that all programmes were designed to operate in a non-discriminatory, WTO consistent manner. Brazil 
recalled that its tax system was complex and often, unintentionally, taxed investments as 
producers overpaid certain taxes along the chain of production and received tax credits to be used at the end of the production chain with the final products. The measures were conceived to change 
this anomaly and to bring the Brazilian tax system to international norms. From a fiscal 
standpoint, the measures were neutral as they simply displaced a credit along the value chain.  
15. Brazil presented oral replies, to be followed in writing, to the written questions posed. He 
asked Members to submit questions posed today in writing. With regard to question 1, Article 7 of Law 12.794 of 2 April 2012 set out technology and production requirements for the tax benefits that aimed to attract investments in research, development and technological innovation, as well 
as the performance of productive steps in Brazil. The value added requirement contained in 
Article 7 was meant to ensure that technology woul d be effectively internalized in the production 
chain; the measures did not require the purchase or use of domestic products. The pertinent 
Decrees and Ministerial acts were still in discussion and had not yet come into force.  
 16. With regard to question 2, Brazil consider ed that Members, within the boundaries of the 
WTO Agreements may, and in fact did, regulate productive steps, so as to create the appropriate 
conditions for the development of technology-intensive sectors, such as telecommunications, which required significant know-how in the different steps of production of equipment and provision of services. Members had discretion to determine productive steps in different stages of 
the production chain. Brazil stated that the measures were fully consistent with the WTO 
Agreements, as nothing in the WTO Agreements should be read as prohibiting a Member to establish conditions or define levels of production or technology in a certain territory or to define 
levels of production or of technology thereupo n. Nor should it prevent a Member from having 
discretion in determining productive steps in diffe rent parts of the chain of production. If not, 
Members' development policy would be significantly curtailed, relegated only to the final assembly 
of the final good. 
 17. With regard to question 3, basic production processes (PPBs) laid down a set of manufacturing steps that characterized the effective industrialization of a product and was not 
directly related to the domestic origin of a prod uct. If production and technology requirements 
could not be set, investment would have to restrict itself to the mere assembly of parts, effectively preventing the autochthonous develo pment of technology and the training of skilled workers. With 
regard to question 4, PPBs had existed for over 20 years and constituted an important technology 
development tool. The primary legal basis for the PPBs was Law 8.248 of 1991, but features varied from situation to situation and the tax regimes applied were established on a case-by-case basis. 
With regard to question 5, Article 41 of Law 12.715 gave tax credits to accredited companies 
producing or importing automobiles in Brazil in a manner consistent with WTO Agreements. The beneficiaries were entitled to choose freely whic h expenditures listed under the Law they would 
incur in order to acquire the credit. The specific details on how the regime operated and how the 
requirements should be fulfilled were still under discussion. 
 18. The Committee took note of the statements made. 
3  CHINA – CERTAIN INVESTMENT MEASUR ES PERTAINING TO THE STEEL SECTOR 
19. The Chair stated that this item had been on the agenda at the October 2012 Committee 
meeting and was on the agenda at this meeting at the request of the United States. Document 
G/TRIMS/W/103 contained questions posed by the United States to China, to which China 
responded in document G/TRIMS/W/122, circulated today.   G/TRIMS/M/34 
 
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  20. The United States noted that investment in the Chinese steel sector had remained small 
despite China being the largest producing and cons uming steel economy in the world, experiencing 
significant growth in the past decade. China's st eel industry was highly fragmented, with hundreds 
of companies, and Chinese industry and governments faced a severe challenge in modernizing and 
addressing excess steelmaking capacity. The steel industry outside of China, on the other hand, is 
characterized by companies that had a high degree of investment in multiple economies, higher efficiencies, more advanced technologies, and expe rience with steel enterprise restructuring.  
 
21. At the last Committee meeting, China said that there were no restrictions on foreign investments and no requirements on foreign investors that were tied to technology transfer, local content or performance in the steel sector. However, the United States still had concerns, and 
China had not provided written responses to US questions in document G/TRIMS/W/103. The 
requirements in the 2005 Development Policies fo r the Iron and Steel Industry for the Eleventh 
Five Year Period included the requirement that the National Development and Reform Commission 
(NDRC) approve all investments in the steel sector. These requirements stipulated that foreign 
steel companies would not be allowed to invest in greenfield sites, would not be permitted to assume any more than 50% equity stake in steel investments in China, would be required to have 
at least 10 million tons of steelmaking capacity and must own proprietary technology/intellectual 
property or production methods.    22. The 12
th Five Year Steel Plan did not appear to eliminate these requirements. If they had 
been eliminated, could China confirm when and provide the measure(s) that eliminated these 
requirements? Also, the NDRC 2012 Catalogue Guid ing Foreign Investment had only one steel 
sector activity that was "encouraged" for foreign investment (the manufacture of nickel stainless 
steel products) and did not list steel in the restricted or prohibited categories. Was the Chinese 
Government review of foreign investment projects in the steel industry by the NDRC still required? If so, what criteria did the NDRC use to review proposed investment? How did these criteria differ 
from NDRC review of steel investments by Chinese companies? What other agencies were involved 
in the approval process? China was asked to provide any Governmental measures pertaining to investment in the steel sector to explain whether these applied equally to all foreign and domestic investors, and to explain any differences in requ irements for investments by foreign companies.  
 
23. Additionally, regarding the 12
th Five Year Steel Plan which appeared to set local content 
targets for certain steel products imported in large quantities, could China elaborate on the 
apparent requirement that Chinese enterprises sh are of the domestic market for these products 
must reach above 90% for some products and 80% for others? Finally, could China confirm that foreign-invested steel companies and Chinese steel companies would be allowed to freely purchase 
steel from all sources, including import sources?  
 24. The European Union cited several Chinese steel restrictions, including the impossibility for 
the EU steel industry to acquire majority owners hip in Chinese companies – it was limited to 49%. 
Consequently, EU companies could not take part in the restructuring and upgrading of the sector 
as described in the Chinese 12th Five Year Plan. Also, there was a requirement for transfer of 
technology; Chinese companies with foreign capital were not eligible to be on the lists of tenders 
issued by State Owned companies (Buy China Act). The EU had previously flagged issues related 
to the "Steel Industry Development Policy" such as foreign ownership limits, requirements applied in a non-similar way to domestic and foreign companies and guidance linked to the use of national 
equipment and technologies and the reduction of imports. The EU would have appreciated China's 
written clarifications in response to the US questions and the restrictions he cited, in accordance with the practice in this Committee.    
25. Japan referred to China's Protocol of Accession in which China had committed to comply with 
the TRIMs Agreement. China was to eliminate and cease to enforce trade and foreign exchange 
balancing requirements, local content and export  or performance requirements made effective 
through laws, regulations or other measures. Japan would continue to monitor this compliance. 
 26. China said that it had submitted responses to questions last week. It had taken note of the 
additional questions but asked for them in writing to forward to capital.  27. The Committee took note of the statements made. 
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  4  INDIA – CERTAIN PREFERENCES TO DOMESTICALLY MANUFACTURED ELECTRONIC 
GOODS  
28. The Chair informed Members that this item was first considered at the Committee's meeting 
in May 2012, and was on the agenda of this meetin g at the request of the European Union, Japan 
and the United States. Questions posed by the US were contained in document G/TRIMS/W/94, to 
which India responded in G/TRIMS/W/97. Follow-up questions were posed by the United States in document G/TRIMS/W/105, to which India responded in document G/TRIMS/W/111.  
 
29. The United States recalled that, on February 10, 2012, India's Department of Electronics and 
Information Technology (DeitY) issued a policy notice requiring at least 30% of all "government procurement" of "electronic products" to be manufactured domestically. However, a close reading 
of the policy and implementing guidelines revealed  that the policy applied both to government 
procurement and to purchases by private companies that were deemed to have "security implications." While recognizing the right of WTO Members to take measures necessary for the 
protection of national security, the United States  doubted that this approach would advance India's 
security interests. Further, it was concerned that the security rationale advanced for this policy – 
namely, that India must build a domestic manufacturing sector to meet its security needs – could 
encourage similar approaches in other markets, undermining the fundamental WTO principle of 
non-discrimination. The United States looked fo rward to collaborating with India to identify 
mechanisms that could better address important security concerns without discriminating against imported products. Ensuring appropriate consultation with stakeholders when regulating network 
security would be critical to meeting India's ob jectives, and India was urged to issue drafts of 
implementing notifications for public comment and to continue engagement with all stakeholders 
as it considered next steps. 
 
30. The European Union asked for an update regarding the status of the legislation, in particular, 
the scope of the policy was crucial. The EU asked India to provide an update on the implementing 
guidelines, since they were important to ensure transparent, consistent and coherent application of 
the measures, and to respond to the US questions.  31. Japan expressed its continuing doubt ab out the consistency of India's policy with 
Article III:4 of GATT 1994, and Article 2 of the TRIMs Agreement and referred to a notification 
issued by India's Department of Telecommunica tions on 5 October 2012 regarding preference 
requirements to domestically manufactured telecommunication products in government 
procurement. The notification applied to all Mini stries or Departments of the Government (except 
Defense) and the agencies under their administ rative control and for all Government-funded 
telecom projects, which were to comply with requirements on preferential market access and value 
addition under which the percentage of procurement from domestically manufactured telecom 
products was set between 50 to 100%. Further, in January 2013, the same Department issued, for comments, a draft of the "notification regarding the policy for preference to domestically manufactured telecom products in procurement due to security consideration". This draft covered 
procurements by all Government licensees and th eir managed service providers. If entered into 
force, procurements by the private sector should  give preference to domestically manufactured 
telecom products if they were deemed to have secu rity implications. In reply to the question about 
the evaluation of "security implication", India stat ed (in G/TRIMS/W/111) that it would be done on 
a case by case basis. Japan expressed concer n with using the security exception under WTO 
Agreements in this context.  
 
32. Chinese Taipei had systemic concerns on the WTO consistency of the measures, and was 
concerned that these measures and their implementation would negatively impact trade in ICT products, and not be carried out in a transparent way. It asked India to provide clear information 
that these measures would apply only to government procurement and in no way to the private 
sector.   
33. India recalled that it had responded to questions at the October and May 2012 meetings. It 
had explained how the measures were not inconsistent with the WTO Agreement, and that the 
framework laid down under the Notification no. 8(78)/2010-IPHW, dated 10 February 2013, was 
only an enabling framework and did not, by itse lf, mandate any specific electronic product. The 
rationale of the policy was described in the policy document itself. Regarding the Notification of 5 October 2012, paragraph 2 clearly specified that it was for products for government procurement, for the Government's own use, and not with a view to commercial resale or with a G/TRIMS/M/34 
 
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  view to use in the production of goods for comme rcial sale. This was clearly exempted under GATT 
Article III:8. The security related guidelines were in draft stage so it was not possible to comment on them. India would convey the comments to capital and remained open to bilateral consultation.   
34. The Committee took note of the statements made. 
 
5  INDONESIA – CERTAIN MEASURES ADDRE SSING LOCAL CONTENT IN INVESTMENT IN 
THE TELECOMMUNICATIONS SECTOR  
35. The Chair recalled that this issue was previously considered at Committee meetings held on 
May and October 2009, October 2010, October 2011 and May and October 2012. It was placed on 
the agenda of today's meeting at the request of the European Union, Japan and the United States. 
Questions to Indonesia could be found in documents G/TRIMS/W/61, 71, 78 and 86; responses 
were circulated in documents G/TRIMS/W/63, 75, 80, and 96, respectively. Japan had circulated additional questions in document G/TRIMS/W/104.  
 
36. The United States voiced its concern over local content requirements in recent 
telecommunications decrees that could penalize foreign investors if they did not comply. Indonesia 
needed to attract billions of dollars to further develop its telecommunications infrastructure which 
lagged behind many countries, including its ASEAN partners. Indonesia did not have the domestic sources of investment to supply these resources; investment must come from outside. It looked forward to receiving Indonesia's responses to Japan's questions.  
 
37. Japan also voiced concern about the local content requirements in Indonesia's 
telecommunications sector. The fact that the projects were funded by the Government which 
selected operators through a bidding process was not sufficient to regard such entities as 
governmental agencies exempt from national treatment obligations under Article III:8(a) of GATT 1994. 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 be considered "government procurement". If the decision regarding the procurement was 
made independently from the government, such procurement should not be regarded as governmental procurement by governmental agencies which fell under Article III:8(a) of 
GATT 1994. Further, procurement by government al agencies of products purchased "for 
governmental purposes" was regarded as "government procurement" in the context of Article III:8(a) of GATT 1994. Japan considered that "for governmental purposes" did not simply 
mean for the aim of the government but meant for government use, consumption or benefit. In 
this case, procurement by a government should not be regarded as "government procurement" 
envisaged in Article III:8(a) of GATT 1994. Japan en couraged Indonesia to respond in writing to 
the questions in G/TRIMS/W/104. 
 38. The European Union expressed preoccupatio n with the "mushrooming" of investment and 
local content issues in Indonesian legislation. The local content provisions in the telecoms sector 
were a long-standing issue that the EU had raised on several occasions, including at the ministerial 
level. He urged Indonesia to address the relevant regulatory issues to set better conditions to 
attract telecom investments in Indonesia. He asked Indonesia if it aimed to attract more foreign 
direct investment in this and other sectors by taking other measures that would support the same 
public policy objectives without unnecessarily distorting trade and investment. He asked if the mandatory local content requirements were going to be increased from 40% to 50%. If so, why?  
 
39. Canada shared the concerns of the previous speakers and would continue to follow 
developments in the Indonesian telecoms sector.  
40. Indonesia said its previous responses answered  the question of the definition of government 
procurement. Presidential Decree Number 54 of 20 10 defined government procurement, firstly, as 
an activity to obtain goods and services by ministries and institutions of the Government, and 
secondly, as the procurement of goods and services financed by the state budget, or government 
loans or grants. Indonesia was not a party to the WTO Government Procurement Agreement. Concerning the question of who used, consumed or benefitted from such procurement, this 
governmental project was to provide services to the general public living in both served and 
unserved areas. His delegation would submit responses in writing.  41. The Committee took note of the statements made. G/TRIMS/M/34 
 
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6  INDONESIA - CERTAIN LOCAL CONTENT PROVISIONS IN THE ENERGY SECTOR 
(MINING, OIL AND GAS)  
42. The Chair recalled that this item was previously considered at Committee meetings held on 
October 2009, October 2010, October 2011 and May and October 2102. Questions to Indonesia 
had been circulated in documents G/TRIMS/W/70, to which Indonesia replied in documents G/TRIMS/W/74 and 79. Further questions were circulated in document G/TRIMS/W/88, to which 
Indonesia replied in document G/TRIMS/W/100. Most recently, additional questions were 
circulated in document G/TRIMS/W/108, to which Indonesia responded yesterday.    43. The United States recalled that, in response to a question by his delegation, Indonesia 
explained that the requirement to "prioritize" use of local content in the 2009 Mining Law and 
Government Regulation No. 23 Year 2010, "encourages companies to give preference to domestic goods and services provided that they are availabl e in the Indonesian market and meet the quality 
and post-sales service standards, as well as ha ving their sustainability of supply and timely 
distribution warranted" and that "[i]nvestors are considered to have prioritized the use of those goods and services when they have given preferen ce to domestic goods, equipment, services, raw 
materials and/or components as well as imported products sold in Indonesia." Reviewing this 
answer in conjunction with prior discussions in  this Committee, it could be understood that 
investors were required to purchase domestic goods and services unless they could persuade an Indonesian government entity that an exception should apply.  
 
44. In response to concerns that certain measures appeared to constitute export restrictions on certain mined products, Indonesia explained that the Minister of Energy and Mineral Resources 
Decree No. 34/2009 "require a minimum percentage of mining and coal production be prioritized 
for domestic needs at a benchmark price in accordance with the generally effective price in the international market." This response could be under stood to mean that investors were required to 
sell the minimum percentage of the covered product so long as there was any demand in 
Indonesia at the price set by the Government. If so, then the process for identifying the minimum 
percentage and the benchmark price was key to determining whether the investment was worthwhile. However, the United States had not received a clear explanation of the process for 
reaching the minimum percentage of production that must be set aside for domestic consumption, 
nor for calculating the benchmark price.   
45. With respect to the requirement to "prioritize"  the use of local goods and services in the oil 
and gas sector, Indonesia responded that Pres idential Regulation No. 35/2004, "does not 
differentiate between the implementation of prefer ence to domestic goods/services in the mineral 
and coal mining sector and that in the oil and gas sector." Concerning this sector, he asked for 
confirmation that in November 2012, Indonesia' s Supreme Court issued a ruling to disband BP 
Migas, saying the upstream regulator allowed foreign companies too much control over the nation's natural resources. As a result of the Supreme Court ruling, did Indonesia create (under 
Presidential Regulation No. 9 of 2013) a Special Task Force for Upstream Oil and Gas Business 
Activities (SKK Migas) in the Ministry of Energy and Mineral Resources to take over the duties and 
functions of BP Migas? Given that SKK Migas was created in the aftermath of an apparent Supreme 
Court finding that BP Migas was insufficiently restrictive on the activities of foreign investors, did 
SKK Migas plan to repeal the existing local content requirements and/or to enact new restrictions?   
46. In addition, the Supreme Court ruling struck down the unprocessed ore export ban 
provisions of the Ministry of Energy and Mineral Resources regulation, though the Ministry had promised to move forward with the ban. Recent press reports, though, indicated that the Indonesian Government may be softening its stance on the smelting requirement given the 
unlikelihood that Indonesia would have sufficient smelting capacity by 2014 to fully enforce the 
requirement. He asked for further clarity on these matters as they were leading to increased uncertainty in the market.  
 
47. The European Union said that Indonesia's responses regarding prioritisation of local content 
in its legislation covering mining products in mineral and coal reinforced his delegation's concerns. 
The EU urged Indonesia to review the provisions  at stake in light of doubts regarding the 
compatibility of the measures with the WTO Agreements, including TRIMs. His delegation invited Indonesia to consider the long term impacts of recent measures including not only local G/TRIMS/M/34 
 
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  requirements, but also export restrictions and limits imposed on foreign participation, bearing in 
mind G20 commitments to resist and even roll-back protectionist measures.  48. Japan asked Indonesia to explain the consiste ncy of measures stipulated in the Mining Law 
of January 2009 and its relevant decrees which consisted of de facto export restrictions of surplus 
mining products with its obligations under Article XI of GATT 1994 and Article 2 of the TRIMs Agreement. Provisions in the Mining Law which could be implemented inconsistently with the WTO 
Agreements included production controls by the Government which had competence to control 
production and export for national interest, and local content requirements for foreign investors in purchasing domestic goods and services. Finally, Japan was concerned with the divestment obligation to foreign shareholders set out under the decree which regulates implementation of 
mineral and coal mining operations under the Mining Law. 
 49. Canada was following the development of the mining regime in Indonesia given the 
potentially negative impact on current and potent ial future Canadian mining investment there. 
Canada shared the views expressed that certain pr ovisions of the new mining regime appeared to 
discriminate against foreign suppliers while others appeared to restrict exports, and that 
Indonesia's mining laws appeared to be moving in an increasingly restrictive direction, for 
instance, with the export ban on mineral ore an d the divestment law introduced in 2012. Canada 
looked forward to receiving additional clarifications from Indonesia on this matter.  
50. Australia said it had some concerns with the ownership divestment requirements, the 
requirement to prioritise local service providers, do mestic processing, restrictions on the export of 
raw materials, and pressure to renegotiate contracts of work in the regulations concerning the 
mining sector. These regulations created uncertainty for foreign and Indonesian mining ventures 
operating in Indonesia, and had the potential to affect investor confidence more broadly. Australia looked forward to further clarification on the implementation of the regulations.  
 
51. Indonesia requested Members' questions in written form to send to capital for response. 
 52. The United States reiterated the significance of the legal upheaval in the Indonesian oil and 
gas sector with the effective elimination of the oil and gas regulator by the Indonesian Supreme 
Court. It was surprised that the Indonesian representative did not anticipate questions about the actual regulation of this sector. The United Stat es had expected representatives from Indonesia at 
this meeting, given the revolutionary changes in this sector which had been of concern to Members 
for a number of years. It asked for further in formation from the Indonesian representative. 
 
53. The European Union asked for, at least, a preliminary response to the question of whether 
Indonesia would review this legislation in light of WTO rules and provisions.  
 54. Indonesia repeated that it would communica te all the concerns expressed to capital and 
would send responses in writing. 
 55. 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 THE NIGERIA OIL AND GAS INDUSTRY" OF 
APRIL 2010  
56. The Chair recalled that this item was previously considered at Committee meetings held in 
October 2011 and May and 1 October 2012. It was on the agenda of today's meeting at the 
request of the European Union and the United Stat es. Questions posed by the United States were 
circulated in document G/TRIMS/W/89.  
 57. The European Union was waiting for answers to previously submitted questions about this 
law, in particular on its compatibility with th e provisions of the TRIMs Agreement, GATT 1994 and 
the GATS. It recalled a specific question first raised at the May 2012 meeting concerning the r e v i e w  o f  S c h e d u l e  A ,  c o m p r i s i n g  t h e  l i s t  o f  d e tailed local content requirements for good or 
services, and originally foreseen in the legislat ion for spring 2012. To date, no such review had 
taken place. Could Nigeria specify the date of this review and to clarify how it would be carried out? This review could examine whether the legisl ative scheme, and its local content requirements, 
provided the appropriate tool to achieve the stated  goal of enhancing domestic capacity in the oil G/TRIMS/M/34 
 
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  and gas industry. Issues related to the productive capacity and supply possibilities of the relevant 
Nigerian sectors ought to be addressed as well as  some distortions introduced by the requirements 
in Schedule A which favoured pure agency/inter mediation over genuine local investments. The 
issue of WTO compatibility was also a key issue in need of clarification. 
 
58. The United States, noting the absence of Nige ria at the meeting, recalled that it had posed 
written questions in September 2011 and had described its understanding of the measures in the 
Committee meeting of October 2011. At the time, Nigeria said that it had not received any 
instructions from capital, nor answers to the questions. The United States raised this issue again in Committee meetings of May and October 2012 where Nigeria repeated that it had received no information from capital, and was unable to provid e answers to US questions. The questions were 
essentially: 1) was its understanding of the measures correct; and 2) how were these measures 
consistent with the TRIMs Agreement? It urged Nigeria to use the WTO committee system, in which Members could raise concerns and seek understanding of other Members' trade policies 
outside of dispute settlement, to explain how their measures related to the obligations of the 
TRIMs Agreement, and asked the Chair to convey  his statement to the Nigerian delegation 
 
59. The specific measures at issue encompassed general requirements to give "first 
consideration" to goods manufactured in Nigeria; minimum local content requirements for specific goods such as steel plates and pipes, cables, valves, and cement; and mandatory use of locally-manufactured welded and fabricated products. The Local Content Act also directed the Minister of 
Petroleum Resources to develop "a fiscal framework and tax incentives" for companies that 
established facilities or operations in Nigeria "for purposes of carrying out production, manufacturing or for providing any services and goods otherwise imported into Nigeria." The 
United States sought greater transparency, a better  understanding of the process, its participants, 
the standards by which findings were measured, the method of application of any outcomes, and 
expected timeframes of implementation. It also requested an update on any developments with 
respect to the operation of this measure, and information about whether there were any plans to 
expand the measure, either by applying its requir ements to additional goods and services, or by 
increasing local content requirements on goods and services already covered.   
60. Japan shared the views of the previous sp eakers, encouraged Nigeria to expeditiously 
provide clarifications in writing and asked the Secretariat to convey this message to the Nigerian 
delegation. 
 
61. Canada shared the views expressed, and was particularly concerned with Nigeria's apparent 
uneven application of this Act and with its lack of  replies to the US questions, and asked that the 
Secretariat communicate its comments to Nigeria.  
 62. The Committee took note of the statements made and requested the Chair to communicate 
them to the Nigerian delegation.  
 
8  RUSSIA – LOCAL CONTENT CONDITIONS IN THE "AUTO INVESTMENT PROGRAM" 
63. The Chair said that this item had been re quested by the European Union, Japan and the 
United States. These Members had circulated questions to Russia in document G/TRIMS/W/120.  
 64. The European Union said that Russia's notification in document G/TRIMS/N/RUS/1 and 2 
referred to paragraph 1090 of the Working Party Report on the Accession of the Russian Federation
1 According to paragraph 1090, the WTO-inconsistent measures shall be eliminated by 
1 July 2018. Russia also committed to engage in consultations with interested WTO members not later than 1 July 2016 on WTO-consistent measures that could replace the WTO-inconsistent 
measures. During the accession process, Members made a gesture by agreeing to an 
unprecedented transition period for the elimination of TRIMs-incompatible measures in the automotive sector. It was therefore expected that, more generally, Russia's domestic policies and 
measures fully abide by WTO rules, and that th ey be designed and implemented in line with 
Russia's accession commitments. In that regard , Russia's recent, potentially WTO non-compliant 
measures in the automotive sector - like the recy cling fee for vehicles and the introduction of a 
specific import duty for car bodies - were of concern. The EU welcomed Russia's comments on the 
                                               
1 WT/ACC/RUS/70. G/TRIMS/M/34 
 
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  questions in Document G/TRIMS/W/120, and regula r notifications about the steps it was planning 
regarding the commitments in paragraph 1090 of the Working Party Report.    65. Japan noted that, under the "Auto Investme nt Program", agreements existed between the 
Ministry of Economic Development and auto producing and assembling companies which had 
accepted the local content requirement to obtain  preferential tariffs. However, paragraph 1090 of 
the Working Party Report stated that "[t]he representative of the Russian Federation confirmed 
that all WTO-inconsistent measures, including preferential tariffs or tariff exemptions, applied 
pursuant to Auto Investment Program No.1 and Auto Investment Program No. 2 and agreements 
concluded under these programmes would be eliminated by 1 July 2018." On the other hand, in response to a question about phasing out or eliminating the programme, Russia's notification in 
G/TRIMS/N/1/RUS/1 stated, "[t]he ultimate date  of expiration of th e agreements between 
investors and the Ministry of Economic De velopment of the Russian Federation is 
31 December 2020". Japan urged Russia to correct this discrepancy in written form. 
 
66. Japan had an interest in monitoring Russia's implementation of commitments made in the automotive sector, and invited Russia to provide an swers regarding preparatory steps, if any, to 
eliminate measures inconsistent with the TRIMs Agreement. Japan also requested Russia to 
explain its plan of consultations with interest ed WTO Members for the end of July 2016 regarding 
WTO-consistent measures that could be applied in connection with its "Auto Investment Programme". 
 
67. The United States recalled that the negotiated transition period for the Auto Investment was 
a key part of Russia's accession negotiations which his delegation was following closely. 
Paragraph 1090 of the Working Party Report said that the Auto Investment Programs 1 and 2 
would be eliminated by 1 July 2018. However, Russia's notification in G/TRIMS/N/1/RUS/1 stated, "[t]he ultimate date of expiration of the agreements between investors and the Ministry of 
Economic Development of the Russian Federation is 31 December 2020." This followed with the 
Addendum circulated in document G/TRIMS/N/1/RUS/1/Add.1. Could Russia confirm that the ultimate date of expiration of the agreements between investors and the Ministry of Economic 
Development of the Russian Federation was 1 Ju ly 2018? Could Russia also explain what the 
31 December 2020 date represented? Could Russia describe any preparatory steps it had taken or 
was contemplating in connection with the prog rammes' elimination pursuant to paragraph 1090? 
 
68. Further, paragraph 1090 of the Working Party Report included an agreement whereby 
Russia would "engage in consultations with interested WTO Members, no later than 1 July 2016, regarding WTO-consistent measures that could be applied in connection with its Auto Investment 
Programs Nos. 1 and 2 and would notify WTO Members of any measures planned to replace the 
WTO-inconsistent measures applied under these programmes at least six months prior to the adoption of such new measures." Did Russia anticipate any action prior to the next meeting of this Committee that would require notification or consultation pursuant to paragraph 1090' The 
United States delegation would appreciate Russia regularly informing this Committee on steps 
taken to consult interested WTO Members and to eliminate the relevant programmes pursuant to paragraph 1090. 
 
69. Russia recalled its commitments to eliminate all WTO inconsistent measures of this regime 
by 2018. Specific language was contained in paragraphs 1063, and 1072 to 1086. The 
commitments, in paragraphs 1089 to 1090, provided for changing the investment regime to bring 
into compliance with the WTO; it did not provide for elimination of the investment regime or for termination of the investment contracts. The latter would be in force until the dates established in the contracts. The date of 31 December 2020 referred to the date at which the investment 
regimes were limited. The conditions under wh ich Russia acceded to the WTO related to the 
investment regime provided for bringing the regime into compliance by 1 July 2018. Russia had not taken any preparatory steps to bring the regime into conformity by 2018 so far, but would do 
so by 2016. Russia did not plan to hold the cons ultations referred to in paragraph 1090 in the 
Working Party report in the near term. When it developed the measures that would replace the WTO-inconsistent elements of the investment regime, it would inform WTO members of its 
readiness to engage in these consultations, and would submit the notification foreseen in this 
paragraph.   70. The Committee took note of the statements made. 
 G/TRIMS/M/34 
 
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  9  RUSSIA – LOCAL CONTENT REQUIREMENTS FOR AGRICULTURAL EQUIPMENT 
71. The Chair informed Members that this item had been requested by the European Union and 
the United States. These Members had circulated questions to Russia in document 
G/TRIMS/W/116.  
 
72. The United States was concerned about reports that RosAgroLeasing (RAL), a state-owned 
leasing company created to supply agricultural equipment to farmers in Russia, was imposing a 
local content requirement for agricultural equipment. RAL purchased a range of agricultural 
equipment which it leased to over 4,000 farmers. The United States understood that this equipment had to contain some level of local content. However, the threshold was unclear as was how the local content requirement was calculated and applied. He read the questions circulated in 
document G/TRIMS/W/116 and requested responses from Russia. 
 73. The European Union asked Russia for clarification on the practices in the farming equipment 
sector with regard to local content by responding to the questions circulated.   74. Japan expressed its systemic interest and l ooked forward to Russia's explanations about the 
local content requirements in agricultural eq uipment by the state owned leasing company, 
RosAgroLeasing.  75. Russia said that, because his delegation had only received the questions recently, it could 
only provide preliminary responses. Final responses would be provided in writing. RosAgroLeasing was a joint stock company established in 2001 with a 99% share owned by the government. It was the governmental agent in certain agricultural programmes but also set its own business aims 
like a private company. The loan programme reflected in the Working Party Report was operated 
by governmental resolution No. 90 of 4 February 2009. The Ministry of Agriculture was to provide 
loans at below market interest rates for the purchase of farm machinery manufactured in Russia. 
This was terminated and replaced by Resolution No. 1460 of 28 December 2012. He would provide 
more detailed answers at a later stage.   76. The United States asked Russia for a copy of Resolution No. 1460 with its replies to its 
questions. The representative of Russia agreed. 
 77. The Committee took note of the statements made. 
 10  UKRAINE – CERTAIN LOCAL CONTENT PR OVISIONS IN THE DRAFT LAW NO. 10183 
"ON AMENDMENTS TO THE LAW OF UKRAINE "ON ELECTRIC POWER INDUSTRY" 
78. The Chair recalled that this item was discussed at the Committee's meeting in October 2012. 
Questions from the European Union had been ci rculated in G/TRIMS/W/109, to which Ukraine 
responded in document G/TRIMS/W/115. This item has been requested for today's meeting by the European Union, Japan and the United States, which had circulated additional questions in 
document G/TRIMS/W/119.  
 79. The European Union noted that, despite indica tions to the contrary at the last meeting, 
Ukraine had adopted the Amendments in November  2012. They confirmed the introduction of 
specific requirements for energy supply companies, and set out a 50% "local component requirement" for raw materials, supplies, fixed assets, works and services used for the 
development of new investments in energy po wer plants, over a short transition period. 
Additionally, the amendments introduced a green Feed-In-Tariff (FIT) for the production of electricity from renewable sources conditional on a local content requirement in the production of such electricity. Ukraine's responses (in document G/TRIMS/W/115) to the questions put to it at 
the October 2012 Committee meeting (in document G/TRIMS/W/109) were not fully satisfactory. 
Although the EU had several bilateral discussions with Ukraine, it still needed clarification on several points, and looked forward to receiving clarifications orally at this meeting and afterwards 
in writing. 
 80. Japan expressed its systemic interest in this  matter. After the previous discussion over the 
then-draft Law, Ukraine had stated that the law was unlikely to be adopted before the end of the 
year due to elections. However, at the end of November 2012, the President of Ukraine gave the 
green light to the draft, thereby adopting the Amendments. Given this serious situation, Japan G/TRIMS/M/34 
 
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  urged Ukraine to expeditiously provide inform ation on whether the Amendments had been 
implemented, and if so, how. Japan also requested Ukraine to provide an English translation of the 
Amendments. Under the Amendments, Japan underst ood that local-component requirements were 
imposed on companies which intended to invest in the electric power industry. Japan urged 
Ukraine to explain how these requirements would be implemented consistently with Article III:4 of 
GATT 1994 and Article 2 of the TRIMs Agreement. Also, the new legislative regime appeared to make the granting of a Feed-In-Tariff contingent on the purchase or use of products of domestic 
origin for the production of electricity from renewable sources. Japan requested Ukraine to explain 
the consistency of this regime with Articles 3.1(b) and 3.2 of the Subsidy and Countervailing Measures Agreement.  
81. The United States also expressed surprise wi th the adoption of the Amendments to Ukraine's 
electricity law and asked for information about their legal status and how they functioned. Was it 
correct that the investments in this area were now subject to a 50% local content requirement? 
How did the feed in tariff programme, contingent on meeting local content requirements, interact 
with renewable energy investment? If the Am endments did contain such requirements, it 
encouraged Ukraine to consider modifying those policies, in light of its obligations under the GATS 
and TRIMs Agreement and its desire to attract foreign investment to this important sector. 
 
82. Ukraine referred to its previous responses in document G/TRIMS/W/115, and said that 
capital experts would respond to the questions in G/TRIMS/W/119 in the nearest possible term. 
According to the Amendments, the implementation of  relevant provisions on specific requirements 
for energy supply companies had not yet entered into force.  
 
83. The European Union asked what was meant by "the nearest possible term" in regards to the 
time-frame for responses. 
 
84. Ukraine said that it would respond in the ne arest possible term after experts in the capital 
had provided responses. 
 
85. The Committee took note of the statements made. 
 11  UNITED STATES – CERTAIN LOCAL CONTENT REQUIREMENTS IN THE RENEWABLE ENERGY SECTOR 
86. The Chair informed Members that this item ha d been requested by the delegation of India, 
which had also circulated questions to the United States in document G/TRIMS/W/117.  
 
87. India said that the United States implem ented several incentive programmes to promote 
and develop the renewable energy sector at the fede ral, state, regional and local level. Some of 
these programmes made the availability of incentives contingent upon the use of domestic or state specific products, which raised concerns about their compatibility with Article 2 of the TRIMs 
Agreement, read with Article III:4 of GATT 1994, and with relevant provisions of Agreement on 
Subsidies and Countervailing Measures. These local content requirements, besides discriminating against imported products, also prevented US consumers from accessing the best and most 
inexpensive technology and products available elsewhere.  
 
88. India had posed questions at the April meeting of the Committee on Subsidies and 
Countervailing Measures on such programmes in the States of Delaware, Minnesota, 
Massachusetts and Connecticut. It had circulated questions for this meeting on programmes in Michigan, California and Texas, and was examining similar programmes in other US states. Document G/TRIMS/W/117 highlighted extracts of public law and programme guidelines which 
made the grant of benefits such as additional cred its, higher incentive rates or rebates conditional 
upon using domestic content. In addition to asking questions about each programme, India sought information about other programmes with similar requirements and the specific percentages of 
manufacturing or assembling to be done in a particular region, or manufacturing to be done by 
companies having significant presence in a particular region or using domestic feedstock, etc. India also requested details on the current stat us of each programme, policy or implementing 
measure listed therein, and their duration. India looked forward to receiving US replies in the 
meeting and afterwards in writing. 
 G/TRIMS/M/34 
 
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  89. Indonesia registered is systemic concern with these measures, and looked forward to 
discussing the matter further in the next Committee meeting. 
 
90. The United States appreciated India's shared interest in improving the functioning of the 
TRIMs Committee. As the questions were only received recently, relevant officials in his capital were in the process of gathering information about the programmes.  
91. India asked that this item remain on the Committee's agenda for the next meeting. 
 
92. The Committee took note of the statements made. 
 
12  UNITED STATES - DOMESTIC CONTENT REQUIREMENTS IN PROCUREMENT BY WATER 
UTILITIES 
93. The Chair informed Members that this item ha d been requested by the delegation of India,  
which had also circulated questions to the United States in document G/TRIMS/W/121.  
 94. India said that water utilities in some US states mandated domestic content requirements 
with regard to supply of ductile iron pipes and fittings for use in water projects. India was concerned that the domestic content requirements  in respect of procurement practices of the 
water utilities were inconsistent with Article 2 of  the TRIMs Agreement, read with Article III.4 of 
GATT 1994. This was both a systemic and trade issue and deprived foreign exporters of trade 
opportunities by discriminating against imported products. It also hurt the interests of the US 
utilities by preventing them from accessing the best and most inexpensive technology and 
products available elsewhere. Document G/TRIMS/W/121 listed examples of tendering practices of 
some of the water utilities which used domestic content requirements for pipes and fittings. These 
had to be manufactured in the continental US, domestically manufactured, or procured from specific US manufacturers eligible to supply ductile iron pipes for water projects. While it was an 
illustrative list, India was aware of similar practices by other US water utilities. India looked 
forward to the US oral replies to its questions at this meeting, to be followed in writing.   95. Indonesia registered its systemic interest in the issue. 
 96. The United States said it would provide answ ers to India's questions soon. It noted India's 
description of these programmes as "procurement." While it had not reached a legal conclusion in 
this regard, given India's description, was it Indi a's view that, notwithstanding Article III.8 of GATT 
1994, procurements of the nature described by In dia were nevertheless subject to Article III.4 of 
GATT 1994 and, hence, to the TRIMs Agreement? 
 
97. India said that it was seeking a better understanding of the US measures. On the US 
question, India had a legal analysis which it could discuss bilaterally. However, according to its preliminary analysis, these utilities operated on commercial principles and therefore the exemption 
under Article III:8 of GATT 1994 was not available.  
 
98. The United States appreciated India's offer to share its analysis of the interaction between 
Articles III.4 and III.8 of GATT 1994.  On that basis it could prepare its responses in a manner that 
would be satisfactory to India.  
 
99. India had already expressed its view on the inconsistency of these measures. It requested 
replies to its written questions in writing before further discussion, and asked that this item be 
kept on the agenda for the next meeting of the Committee.  
 
100. The Committee took note of the statements made. 
 
13  OTHER BUSINESS 
101. No items were raised under this agenda item. 
 14  DATE OF THE NEXT MEETING 
102. The Chair informed Members that the next scheduled meeting of this Committee would be 
held on Friday, 4 October 2013. In order to provide Members with ample opportunity to prepare G/TRIMS/M/34 
 
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  for this meeting, the Secretariat would issue an annotated draft agenda three weeks in advance of 
the meeting; i.e. by Friday, 13 September 2013. This 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 
communicated in writing to the Secretariat by close of business on Wednesday, 
11 September 2013. The annotated draft agenda would be open to Members' comments until close of business on Friday, 20 September 2012. In addi tion, Members wishing to circulate documents 
should do so by close of business on Friday, 20 Se ptember 2013 so that they could be reflected on 
the airgram. The airgram convening the meeting would be issued on Tuesday, 24 September 2013.  
 
103. The Committee took note of the information. 
 
15  ELECTION OF OFFICERS 
104. The Committee elected Mr Tsotetsi MAKONG (Lesotho) as Chairman for 2013.  
 
105. The meeting was adjourned. 
 
 
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