WORLD TRADE  
ORGANIZATION  RESTRICTED 
G/TRIMS/M/31 
10 November 2011  
 
(11-5802) 
Committee on Trade-Related Investment Measures  
  
 
MINUTES OF THE MEETING HELD 
ON 3 OCTOBER 2011 
 
Note by the Secretariat 
 
 
1. The Committee on Trade-Related Investment Measures (the "Committee") met on 
3 October 2011.  The meeting was opened and conducted under the Chairpersonship of 
Ms Zhao HONG (China).  The Committee adopted  the agenda contained in WTO/AIR/3807. 
A. NOTIFICATIONS UNDER ARTICLE 6.2 OF THE TRIMS AGREEMENT  
2. The Chairperson indicated that Article 6.2 of  the Agreement on Trade Related Investment 
Measures (the "TRIMs" Agreement) requires Member s to notify the Secretariat of publications in 
which TRIMs may be found, including those ap plied by regional and local governments and 
authorities.  She reported that since the last mee ting of the Committee, Lesotho and the United Arab 
Emirates submitted their notificati ons under Article 6.2.  The latest compilation of all notifications 
made under Article 6.2 was circulated in documen t G/TRIMS/N/2/Rev.21, dated 26 August 2011.   
3. She recalled that compliance with this notif ication obligation was discussed informally on 
17 March 2009 and then formally on 20 May 2009.  She reminded Members that Article 6.2 and the 
1996 Committee Decision contained in document G/ TRIMS/5 required each Member to notify the 
Secretariat of the names of publications in whic h TRIMs might be found, where such publications 
existed, including those applied by regional a nd local governments and authorities within their 
territories, and the addresses from which copies could be obtained, without prejudice to the legal 
consistency of any TRIM which might be found in the publications notified.   
4. She reiterated that the obligation to provide notif ication of publications  related to all TRIMs 
that Members maintained, not only those incons istent with the TRIMs Agreement, but those 
consistent with the Agreement too.  In other wo rds, in case a Member had no TRIMs which were 
inconsistent with the TRIMs Agreement, but maintained TRIMs consistent with the TRIMs 
Agreement, that Member would have an obligation to report all publications where such TRIMs might 
be found.   
5. The Chairperson also recalled that the Committ ee agreed at its formal meeting held on 
20 May 2009 that the Secretariat issue reminders  every six months to remind Members of this 
notification obligation and that, accordingly, the Secretariat had issued, on 16 March 2011, the first 
2010 reminder in this regard which was circul ated in document G/TR IMS/W/81 and the second 
reminder which was circulated in document G/TR IMS/W/82 dated 2 September 2011.  She strongly 
urged Members that had not provided their notifications  to date to provide such  notifications promptly 
and requested Members that had provided them  some time ago to have them updated.   
6. The Committee took note of the Chairperson's statem ent and agreed to revert to this item at a 
future meeting.   G/TRIMS/M/31 
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  B. 
PROPOSALS ON SPECIAL  AND DIFFERENTIAL (S&D)  TREATMENT PROVISION S RELATED TO THE 
TRIMS AGREEMENT  
7. The Chairperson recalled that pursuant to the Decision adopted by the General Council on 
1 August 2004 (WT/L/579) and paragraph 37 of the Hong Kong Ministerial Declaration 
(WT/MIN(05)/DEC), the TRIMs Committee continued its consideration of the Category II Special 
and Differential Treatment ("S&D") proposals which were referred to it by the Chairman of the 
General Council.  The proposals were original ly submitted by the African Group in document 
TN/CTD/W/3/Rev.2 and related to Articles 4 and 5.3 of the TRIMs Ag reement.  In April 2007, Kenya 
on behalf of the African Group s ubmitted a revised version of th e proposals, which dealt more 
specifically with the concerns of the proponents (see Annex).   
8. In June and October 2007, the Chairperson of  the Committee at the time held informal 
discussions with interested delegations on the revi sed proposals.  These were further discussed at the 
meeting of the Committee held on 1 November 2007 at which the representative of Kenya said that 
they were open to listen to any new ideas concerning these proposals, particularly with respect to the 
drafting, and that the African Group felt that it had gone as far as it could on this issue, unless there 
were other suggestions by other Members.  No fu rther revisions to the draft proposals were received 
from the proponents since then.   
9. The Chairperson added that the latest revisi on of the African Group's proposals was annexed 
to the Minutes of the October 2010 meeting contained in document G/TRIMS/M/30 .  The discussion 
of the revised text which took place at the informal  consultations held in June and October 2007 and 
at the November 2007 meeting of the TRIMs Committ ee was reflected in the Minutes of that meeting 
(contained in document G/TRIMS/ M/26, paragraphs 4-9).   
10. In accordance with paragraph 37 of the Hong K ong Ministerial Declaration, the Chairperson 
of the TRIMs Committee at the time submitted an oral re port to the General Council on 
18 December 2007 (contained in document WT/GC/ M/112, paragraph 142) on the work undertaken 
by the Committee with respect to the S&D proposals.   
11. At the meetings of 23 October 2008 and 16 October 2009, the Chairperson's predecessors 
expressed their readiness to continue their informal  consultations on this issue, should Members so 
wish, and report back to the Committee and the Gene ral Council at an appropriate time on any further 
developments.  She noted that an oral report to this  effect was made by her predecessor to the General 
Council on 17 December 2009 (contained in documen t WT/GC/M/124, paragraph 52). However, no 
delegation contacted the Chairperson or the Secretar iat to request the continuation of the informal 
consultations in this regard.  
12. The Chairperson also recalled that at the Committee meeting of 1 October 2010, her 
predecessor opened the floor for comments on this issue, but no Member took the floor.  She noted that her predecessor had also expressed her readiness to  conduct informal consultations on this issue, 
should Members so wish and report back to the Co mmittee and the General Council at an appropriate 
time on any further developments. However, since that meeting no delegation had contacted the 
Secretariat or the Chairperson to request such c onsultations and thus no fu rther developments have 
taken place since then.  
13. Finally, the Chairperson opened the floor for comments on this issue at the 3 October 2011 
meeting, but no Member took the floor. She reiterated the willingness to continue informal 
consultations on this issue, should Members so wi sh, and indicated that any further developments 
would be reported back to the Committee and the Ge neral Council at an appropriate time. She invited 
Members requesting such consultations to contact the Chairperson or the Secretariat in this regard.    G/TRIMS/M/31 
 Page 3 
 
 
  14. The Committee took note of the Chairperson's statem ent and agreed to revert to this item at a 
future meeting.    
C. CERTAIN MEASURES BY INDONESI A ADDRESSING LOCAL CONTENT IN INVESTMENT IN THE 
TELECOMMUNICATIONS SECTOR – REQUEST BY THE EUROPEAN UNION AND JAPAN  
15. The Chairperson recalled that this issue was placed on the agendas of the Committee 
meetings held on 20 May and 16 October 2009, as well as the Comm ittee meeting of 1 October 2010. 
Discussions pertaining to this issue could be foun d in the minutes of the meetings contained in 
documents G/TRIMS/M/28, G/TRIMS/M/29 and G/TRIMS/M/30. She added that prior to the circulation of the airgram for this meeting; the European Union and Japan had requested that this 
issue be placed on the agenda of the meeting. 
16. The chairperson drew Members' attention to  document G/TRIMS/W/71 entitled "Questions 
from Japan on Indonesia's Regulations on Communica tion and Information Regarding the Supply of 
the Universal Telecommunication Service Obliga tion and the Guidelines for Evaluation of the 
Achievement of Domestic Component Level in  Telecommunication Operations", document  
G/TRIMS/W/75 containing the written responses of Indonesia to Japan's questions, document 
G/TRIMS/W/78 containing written  follow-up questions from Japan, document G/TRIMS/W/80 
which was received from Indonesia following the l ast Committee meeting and which contained the 
written answers to those follow-up questions , and finally document G/TRIMS/W/86 dated 
22 September 2011 containing additional follow-up ques tions submitted by Japan in this respect.  
17. The representative of Japan appreciated the written answers provided by Indonesia in 
document G/TRIMS/W/80 and indicated that Japan had seriously considered the responses provided 
by Indonesia. As a result, Japan recognized that  the answers pertaining to the coverage of the 
"Government Procurement", which were  subject to relevant laws and regulation, were not sufficient. 
According to Indonesia's answers, the scope of  Government procurement was not clear. In case 
Indonesia continued to impose the local content requ irement on the procuremen ts which were related 
to the government projects and were not classified in the government procurements stipulated in the 
GATT Article III.8 (a), it would lead to inconsiste ncy with the GATT Article III.4 and Article 2 of the 
TRIMs Agreement. In addition to the above-mentioned concern, he also raised  concerns pertaining to 
the procurement of the telecommunications devices and tools.  
18. As an example, the representative of Japan indicated that according to the Minster of 
Communication and Information Regulatory (07/PE R/M.KOMINFO/01/2009), the procurements of 
the telecommunications devices and tools seemed to be  subject to the local content requirement, even 
though these procurements were not directly linked to  the government projects. He submitted that this 
might result in inconsistencies with the relevant WTO articles as well and that as a result Japan's 
concerns remained in some areas. In this rega rd, he referred to the question posed by Japan in 
document  G/TRIMS/W/86  and requested Indonesia to  provide an answer to this question as soon as 
possible in  order to enhance the transparency  of Indonesia's investment regimes.    
19. The representative of the European Union appreciat ed the elements circulated by Indonesia in 
document G/TRIMS/W/80. However, he believed that  further clarifications were needed. From a 
general point of view, he requested to receive an update regarding the latest developments related to 
the telecommunications decrees. He noted that in In donesia's reply to question 4 as contained in that 
document, it was indicated that the Minister of  Communications and Info rmation Technology had 
never enacted the Decree No 10/2009. He was therefore of the view that it would be very useful to get 
an overview of the current regulatory framework.  
20. On substance, the representative of the Eur opean Union was all the more concerned as 
Indonesia had recently updated its legislation on go vernment procurement and had set local content G/TRIMS/M/31 
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  requirements that were to be applied also to tende rs by private companies in telecom and electricity 
sectors. From a policy point of view, he considered  that the Indonesian public policy goals (notably 
covering employment and poverty reduction) were  better served by opening up for competition- 
including foreign competition - and that an open, transparent and reliable regulatory framework would 
obviously contribute to attracting further FDI. He expressed concern with respect to the extensive 
interpretation given by Indonesian authorities to "g overnment procurement". He indicated that he 
would be looking forward to Indonesia's replies to the questions raised recently by Japan on 
government procurement-related issues.  
21. The representative of Canada shared the c oncerns expressed by other Members regarding 
certain provisions affecting the telecommunicati ons sector and strongly encouraged Indonesia to 
consider the impact such provisions could have on the investment and innovation. She emphasized her 
interest in ensuring non-discriminatory treatment in the Indonesian telecommunications sector and 
noted that Canada would closely continue to follow the developments in this sector.     
22. The representative of the United States noted that the dynamism of Indonesia's 
telecommunications sector had been impressive, its development contained tr emendous opportunities, 
both for Indonesia and for the companies that pa rticipated, and that the United States had been 
following this discussion with great interest. She sh ared the concerns expressed by other Members 
about the provisions which appeared to favor local content. She urged Indonesia to bear in mind that 
such provisions could discourage both investme nt and innovation.  In an area such as 
telecommunications with import knock on effects in the rest of the economy , such policies, while 
perhaps providing short-term benefits to a small sect or of the economy, might have deleterious effects 
on Indonesia's overall development goals. 
23. The representative of Indonesia noted that the questions had been forwarded to the related 
authorities in Capital and that the formal answ ers would be provided in writing and sent to the 
Committee in the near future. As a preliminary response, he referred to the Presidential Decree 
No. 54/2010 concerning the regulations on government  procurement and the c overage of commercial 
activities considered as government procuremen t. He also referred to the Minister of 
Telecommunication and Information Decree No.7/ 2009 which stipulated that procurement by 
companies which would win the contract of government procurement project in telecommunication sector in the "Universal telecommunication Serv ice areas" should abide by the rules in the 
government procurement. He indicated that Indonesi a's laws and regulations would not differentiate 
between domestic and foreign bidders in the area  of telecommunications. He submitted that the 
regulation would not apply to any procurement by  service operators outside government procurement 
project. He finally indicated that Indonesia was not  a signatory of the Plurilateral Agreement on 
Government Procurement in WTO. 
24. The Committee took note of the statements made. 
D. CERTAIN INDONESIAN LAWS AND DRAFT IMP LEMENTING REGULATIONS ON MINERAL AND 
COAL MINING - REQUEST BY THE EUROPEAN UNION , JAPAN AND THE UNITED STATES  
25. The Chairperson recalled that this issue was pl aced on the agenda of the Committee meetings 
held on 16 October 2009 and 1 October 2010 and discussi ons pertaining to this issue could be found 
in the minutes of these meetings contained in  documents G/TRIMS/M/29 and G/TRIMS/M/30 & 
Corr.1. She indicated that prior to the circulation of the air gram for this meeting, the European Union, 
Japan, and the United States requested that this ite m be placed on the agenda of the meeting.    
26. The Chairperson drew Members' attention to document G/TRIMS/W/70 submitted by the 
European Union and the United States on certain Indonesian laws and draft implementing regulations on mineral and coal mining, document G/TRIM S/W/74 containing the responses provided by  G/TRIMS/M/31 
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  Indonesia to the questions posed by the European  Union and the United States in G/TRIMS/W/70, 
and document G/TRIMS/W/79 containing written answer s - provided by Indonesia following the last 
Committee meeting - to the questions posed by the United States and comments made by Canada and 
the European Union at the last Committee meeti ng held on 1 October 2010. Finally, she referred to 
document G/TRIMS/W/88 containing the written questions submitted by the United States to 
Indonesia on 21 September 2011 concerning Indonesi a's energy sector (mining, oil and gas). 
27. The representative of the United States expres sed appreciation for Indonesia's responses 
contained in document G/TRIMS/W/79.  However, she noted ongoing concerns regarding Indonesia's 
existing law, and its draft implemen ting regulations, applicable to investment activities in Indonesia's 
mineral and coal mining sector.  In particular, she posed questions related to the disciplines in the 
TRIMs Agreement and the GATT 1994, as well as the General Agreement on Trade in Services 
(GATS).   
28. The representative of the United States referred to the questions previously submitted by the 
United States to Indonesia about the 2009 Mining Law and its implementing regulations.  The law 
stated that operators ought to "prioritize" the u tilization of local manpower  and domestic goods and 
services. She quoted Article 106 of the Law which stat ed that operators "must prioritize the utilization 
of local manpower and domestic goods and servi ces in accordance with laws and regulations", 
Article 102 which stated that "an operator must in crease the value added of mineral and/or coal 
resources in carrying out mining, processing, and refi ning and utilization of the materials and coal", 
and Article 103.1 which stated that "a production operation must carry out processing and refining of 
the mining process inside the country".  She a dded that, based on the responses provided to the 
United States' questions, the laws and regulations them selves, and other materials, it was clear that the 
policy intent of these measures was to promote domestic production and employment by favoring 
Indonesian products and suppliers. 
29. In light of the information that had been pr ovided, the representative of the United States 
requested to get a better understanding of the implementation of these measures. In this respect, she 
asked how Indonesia defined the term "prioritize" , who would determine wh ether local goods and 
services were available, and whether a foreign inv estor had "prioritized" the use of those goods and 
services. She also inquired whether the domestic pr oducts ought to be selected if domestic goods and 
imports were both available and roughl y equivalent in quality, price, and other factors. She also asked 
whether in practice there was a difference betw een an imported product and an imported product 
already being sold in Indonesia. She added that the United States had some additional questions on 
this issue contained in document G/TRIMS/W/88. 
30. The representative of the United States also noted  that Indonesia had similar regulations in the 
oil and gas sector.  Article 79 of the Presidential Regulation No. 35/2004, which regulated contractor 
activities in the upstream oil and gas sector, stated "contractors must prioritize the use of domestic 
goods, services, technologies, and engineering and desi gn capabilities" and this prioritization "shall be 
carried out if the necessary goods, services, te chnologies, and engineering and design capabilities 
have been made or are available domestically a nd satisfy the quality/grade, delivery date, and price 
requirements in goods and services procurement." She indicated that this was a source of concern to 
the United States and some specific questions were po sed to Indonesia in this  respect in document 
G/TRIMS/W/88 and that she would appreciate responses to those and other questions from 
Indonesia.   
31. In conclusion the representative of the United States mentioned that at a time when the 
Government of Indonesia had been prominently tr ying to attract foreign direct investment to 
Indonesia, and the KEN master plan had been pur suing a laudable goal of transforming Indonesia's 
development, these types of restrictions would appear  to be multiplying.  These restrictions were both G/TRIMS/M/31 
Page 6  
 
  discriminatory and harmful to Indonesia's effort s to improve its competitiveness as an investment 
destination. 
32. The representative of the European Union refe rred to the elements submitted in document 
G/TRIMS/W/79, while taking into account the exchange of views that took place in the TRIMS 
Committee of 1 October 2010. He posed a number of follow-up questions. At the meeting of the 
TRIMS Committee of 1 October 2010, Indonesia men tioned that certain im plementing regulations 
under the Law No.4/2009 on Mineral and Coal Mining were still being discussed. He inquired 
whether Indonesia could provide an update on the status  of the implementing regulations and, if these 
were still to be adopted and whether ther e was a timeframe for such adoption.   
33. The representative of the European Union also  referred to Indonesia's replies contained in 
document G/TRIMS/W/79 in which Indonesia provided  in its answer to question 1, a number of 
elements related to Article 87 of the Government  Regulation No 23/2010.  Furthermore, reference 
was made to Indonesia's oral answers provide d at the meeting of the TRIMS Committee of 
1 October 2010 and to its submissi on contained in document G/TRIMS/W/74. He indicated that in its 
latest submission contained in document G/TRIMS/W/ 79, Indonesia had noted that the provisions at 
stake amounted to an encouragement to use goods, equipment and/or supporting materials that were 
already available in the Indonesian domestic market . He requested Indonesia to be more specific in 
replying to question 1 referred to in document G/ TRIMS/W/79. He inquired whether Indonesia could 
confirm the European Union's understanding that th ese provisions obliged investors to use domestic 
goods and equipment and/or supporting material, as we ll as imported products be ing sold in Indonesia 
and used for mineral and coal mining activities whic h would meet the criteria and, therefore, had 
prevented those investors from importing goods and equipment. 
34. The representative of the European Union al so posed follow-up questions to Indonesia's 
replies to questions 3 and 4 contained in documen t G/TRIMS/W/79.  He indicated that it appeared 
that investors were not allowed to import those goods, equipment or and/or supporting material, 
which were available in the Indonesian market and requested Indonesia to explain how this would be 
consistent with Article III of the GATT 1994, Article 2 of TRIMS Agreement and its Annex 
(paragraphs 1 and 2).  He also requested Indon esia to provide written responses to these different 
questions. 
35. The representative of Japan appreciated Indonesi a's answers to the joint questions made by 
the United States and the European Union in docume nt G/TRIMS/W/79. However, Japan regarded the 
answers as not sufficient and that there were still sy stemic issues to be addressed in terms of the 
Indonesian "Mining Law in 2009". In this respect, he raised three specific concerns.  
36. First, according to Article 103.1, Japan unders tood that processing and refining ought to be 
carried out in Indonesia, through the prioritized allocation of mining to the smelter in Indonesia. Also, according to Article 102, through mining, processing and refining and utilization of the materials and 
coal, an operator ought to increase added va lue. These measures might constitute the de facto  export 
restrictions that limit the export of mining. Thus, it might be inconsistent with the GATT Article XI 
and Article 2 of the TRIMs Agreement.  
37. Second, Japan was of the view that such article would stipulate that the Indonesian 
Government could decide the annual production and ad minister the export. This provision enabled the 
Indonesian Government to take discretionary me asures to regulate the export and thus might be 
inconsistent with the GATT Article XI a nd Article 2 of the TRIMs Agreement.  
38. Third, Japan recognized that this law had al so provisions 124 - 127 pertaining to the local 
content requirement which also might be in consistent with the GATT Article III.4.   G/TRIMS/M/31 
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  39. The representative of Japan requested Indonesia to further clarify how such measures could 
be consistent with the WTO agreements.  
40. The representative of Canada appreciated the responses Indonesia provided to the questions 
posed by the European Union and the United States  regarding investments in the mining sector and 
looked forward to hearing Indonesia's responses to th e recent set of questions from the United States. 
She added that Canada would be following the de velopments in the new mining regime with great 
interest and that it was still very concerned a bout the potential negative impact on both current and 
future mining investments in Indonesia. She shared  the concerns expressed by others that certain 
provisions of the new mining regime appear to disc riminate against foreign suppliers while others 
appear to restrict exports. She indicated that  she would be looking fo rward to any additional 
information from Indonesia which could help clarify th e impact of the measures in question.      
41. The representative of Indonesia indicated that th e questions had been forwarded to the related 
authorities in Capital and that the formal answers would be provided in writing to the Committee in 
the near future.  As a preliminar y response, he referred to the Presidential Decree No. 2/2009 which 
stipulated that any government procurement project should maximize the use of domestic 
goods/services. The Ministry of Industry had issued inventories of domestic goods/services which 
could be used as reference by any companies whic h would want to take part in any government 
procurement project. The implementation of local content requirement in the mining and mineral 
sector was subject to the suitability of the domestic goods/services, the qualification and expertise of local manpower, the technical requirement/exper tise needed by investors, as well as price 
competitiveness. He explained that the local content level should be negotiated and agreed on by the 
investors and the relevant government agency. He al so added that "BPMIGAS" had issued guidelines 
Number 007/REVISI-II/PTK/I/2011 which further regulated the implementation of the Presidential Decree No.2/2009 in the oil and gas sector. The regulation opened the door for investors to import the 
goods/services needed when the goods/services availa ble in the domestic market could not satisfy 
their needs.  
42. The Committee took note of the statements made. 
E. INDIA - MANDATORY LOCAL CONTENT REQUIREMENTS IN PROJECT GUIDELINES FOR PHASE 1 
(BATCH 1 AND BATCH 2) OF THE JAWAHARLAL NEHRU NATIONAL SOLAR MISSION - REQUEST 
BY JAPAN AND THE UNITED STATES  
43. The Chairperson stated that this issue was pla ced on the agenda at the request of Japan and 
the United States. She drew Members' attention to document G/TRIMS/W/87 containing the written 
questions submitted by the United States to India on 21 September 2011.  
44. The representative of the United States indicat ed that in 2009, India launched a major new 
initiative – the Jawaharlal Nehru National Solar Mi ssion – intended to boost di ffusion of renewable 
energy generation within India, and to "establish India as a global leader in solar energy."  In 
July 2010, India's Ministry of New and Renewable Energy (MNRE) issued guidelines for the 
selection of projects under Phase 1 of the Jawaharlal Nehru National Solar Mission.  The guidelines 
provided that project developers "are expected to procure their project components from domestic 
manufacturers, as far as possible."  For photovolta ic projects based on crystalline silicon technology, 
the guidelines required that all project developers use modules manufactured in India; for such projects selected in FY2011-2012, developers ought to use both modules and cells manufactured in 
India.  For projects based on solar thermal technology , the guidelines required 30% local content in all 
plants and installations. 
45. The representative of the United States added th at the general guidance to procure project 
components from domestic manufacturers; the mandato ry requirement to use locally manufactured G/TRIMS/M/31 
Page 8  
 
  PV modules and cells; and the mandatory requirement  to achieve 30% domestic content in thermal 
projects appeared to constitute measures that re quired the purchase or use of products of domestic 
origin or from a domestic source.  She requested  India to explain how it believed each of these 
measures individually would comport with the oblig ations in Article 2 of the TRIMs Agreement and 
the Illustrative List thereto. She submitted that the "domestic content requirements" required that 
investors use certain domestically-manufactured solar equipment in order to be  eligible to develop 
solar projects under the JNNSM.  In this light, she also requested India to explain how these domestic 
content requirements were not "mandatory" measures that ought to be complied with to obtain an 
advantage, and that required the purchase of domestic products, as set out in the Illustrative List of the 
TRIMS Agreement.
 
46. Furthermore, the representative of the United States noted that in its discussion of the 
Jawaharlal Nehru National Solar Mission, MNRE recommended that custom and excise duty concessions and/or exemptions be made available for equipment, materials, and components imported 
for approved Mission projects.  It further provided that a "normative Generation Based Incentive," or feed-in tariff, will be payable for approved Mission projects. In light of the fact that all Mission 
projects ought to mandatorily achieve previous ly specified local content and local purchasing 
requirements, the incentives provided for by MNRE a ppeared to condition the receipt of an advantage 
on a requirement to purchase or use products of dom estic origin or from a domestic source.  She 
requested India to explain how it believed these me asures, taken together, would comport with the 
obligations in Article 2 of the TRIMS Agreem ent and the Illustrative List thereto.   
47. The representative of Japan expressed concerns regarding the local content requirements that 
were introduced for the establishment of "Feed -in-Tariff Program" under the Jawaharlal Nehru 
National Solar Mission in terms of their consistency with the TRIMs Agreement. He submitted that 
Japan generally understood the introduction of the "Feed-in-Tariff Program" as what would eventually 
promote the usage of recyclable energy. On the ot her hand, Japan's main concern pertained to the 
introduction of the local content requirement which would lead to the extension of protectionist 
measures.  He recalled that Japan had already ra ised this issue in the Committee on Subsidies and 
Countervailing Measures as well as in the context of  India's trade policy review. He encouraged the 
Indian Government to provide the full picture and explain related sub-projects of this project in a 
transparent manner.  
48. The representative of the European Union submitte d that India had decided to expand sources 
of renewable energy, notably solar energy. The measures implementing this policy option should 
obviously be in full compliance with the WTO Agreem ents. However, reports pertaining to the Indian 
National Solar Mission received by the European Uni on were a source for concern.  He explained that 
the National Solar Mission 2009 (to be implemented in 3 phases) had laid out local content requirements for solar power plants. It was underst ood that a large percentage of the solar power 
generation would be from the private sector, so these would be investment requirements rather than 
procurement requirements. He stress ed that the first round of selection of projects – be it solar PV 
projects using crystalline silicon technology or solar concentrated projects - took place in 2010- 2011 based on certain local content requirements. Fo r instance, the use of cells and/or modules 
manufactured in India for solar PV projects and requirement of at least 30 % local content imposed for all plants/installations for solar concentrated power projects. Phase 2 would start in 2013 and the 
European Union understood that the local content requirements for that phase would be decided after 
looking at the experience of the 1
st phase. 
49. The representative of the European Union requested  India's clarifications with respect to those 
local content requirements that had been applied. In particular, he asked India to elaborate on how 
these were consistent with Article 2 of the TRIMS Agreement as well as its Annex.  He also requested 
India to explain whether local content requirements would be applied in phase 2 and what steps India  G/TRIMS/M/31 
 Page 9 
 
 
  would intend to take to ensure fu ll consistency with the WTO Agreements.  He also requested India, 
in addition to any oral replies provided at the meeting, to provide its responses in writing.  
50. The representative of India explained that India had answered similar questions in the context 
of its recent trade policy review. As per the informa tion from Capital, he explained that digital video 
conferences had also been held between the Indi an Ministry concerned and its United States' 
counterpart to clarify this issue. He indicated that  he would provide oral answers to the United States' 
questions at the meeting and that the written r esponses would be circulated following the meeting1.  
51. The representative of India indicated that the Jawaharlal Nehru National Solar Mission 
(JNNSM) had been a major initiative of the Governme nt of India and State Governments to promote 
ecologically sustainable growth while addressing I ndia's energy security challenge. It would also 
constitute a major contribution by India to the global effort to meet the challenges of climate change. 
He explained that sustainable development had alwa ys been an important goal of the WTO and that 
solar energy was environment friendly as it had zero emissions while it generated electricity or heat. 
The aim of the JNNSM was to focus on setting up an enabling environment for solar technology 
penetration in the country both at a centralized and de-centralized level.  The GATT Article III: 8(a) 
permitted exemption from the national treatment princi ple in respect of procurement by governmental 
agencies of products for specified purposes and, ther efore, the programme was not inconsistent with 
the provisions of Article 2 of the TRIMS Agreem ent.  In India's view the domestic content 
requirement had not been with a view to obtain an advantage and was, therefore, not covered by the 
Illustrative List of the TRIMS Agreement.   
52. In his reply to question 3, the representativ e of India referred to the Mission's Document 
(http://mnre.gov.in/pdf/mission-document-JNNSM.pdf ) which recommended fiscal incentives 
(customs and excise duties exemptions / concessions) on specific capital equipment, critical materials, 
components and project imports. The Mission Document also envisaged a Normative Generation 
Based Incentive payable to the utility that would be calculated as the difference between the solar 
tariff determined by the Central Electricity Regu latory Commission and the base price, as indicated 
therein. However, the document did not suggest an y linkage of the aforementioned incentives with the 
local content requirement, if any.  
53. Regarding the questions raised by the European  Union, the representative of India requested 
these questions to be submitted in writing, so th at India could respond to them in writing after 
consulting with Capital.  
54.  The Committee took note of the statements made. 
F. NIGERIA - CERTAIN MEASURES TAKEN BY NIGERIA AND CONTAINED IN THE "ACT TO PROVIDE 
FOR THE DEVELOPMENT OF NIGERIAN CONTENT IN THE NIGERIA OIL AND GAS INDUSTRY " OF 
APRIL 2010  - REQUEST BY THE EUROPEAN UNION AND THE UNITED STATES   
55. The Chairperson stated that this  issue was placed on the agenda of the meeting at the request 
of the European Union and the Un ited States. She drew Members' attention to the room document 
containing certain written comments and questions  posed by the European Union as well as to 
document G/TRIMS/W/89 which also contained wr itten questions submitted by the United States to 
Nigeria on 21 September 2011.   
56. The representative of the United States indicated that in April 2010, Nigeria passed an Act to 
provide for the development of Nigerian content in the Nigeria oil and gas industry.  The Act was 
                                                      
1 G/TRIMS/W/91.  G/TRIMS/M/31 
Page 10  
 
  intended to "change the shape of oil and gas business in Nigeria," in particular by boosting 
"indigenization" of the sector.   
57. Thus, the Act appeared to establish mandatory local sourcing and local content requirements 
applicable to a comprehensive range of goods  and services consumed by Nigeria's oil and gas 
industry. The Act's general requireme nts of "first consideration" to goods manufactured in Nigeria, its 
specific requirements for mandatory minimum local content in specified goods categories, and its 
requirement to use products fabricated and welded in Nigeria, each appeared to constitute measures 
that required the purchase or use of products of dom estic origin or from a domestic source.  She 
requested Nigeria to explain how it believed these measures would have comported with the 
obligations in Article 2 of the TRIMs Agreement a nd the Illustrative List thereto. In addition, the 
Act's provision on fiscal incentives appeared to constitu te a measure that conditions the receipt of an 
advantage on a requirement to purchase or use products of domestic origin or from a domestic 
source.  She inquired whether Nigeria believed th is measure comported with the obligations in 
Article 2 of the TRIMS Agreement and the Illustrative List thereto.  
58. The representative of the European Union noted that this was the first time for this issue to be 
placed on the agenda of this Committee. That bei ng said, the European Union had already had the 
opportunity to raise its concerns regarding local c ontent requirements in Nigeria's oil and gas sector 
and in Nigeria's trade policy review in June 2011. He also mentioned that this was a shared concern 
among other Members. He indicated that he had made available a list of questions related to this law 
and its local content requirement, in particular as to its compatibility with the provisions of the TRIMs 
Agreement, the GATT 1994 and the GATS. He stated that he looked forward to receiving answers to 
the different questions and would also welcome Nigeria's written responses in this respect.  
59. Beyond the general and key issue of WTO compatibility,  the representative of the 
European Union also inquired whether the local co ntent requirements, as they stood today, would 
provide the appropriate tool to achieve the stated  goal of enhancing domestic capacity in the oil and 
gas industry. He indicated that he would wish to highlight concerns related to the productive capacity 
and supply possibilities of the relevant Nigerian sector s; whether these would be taken into account in 
the forthcoming review of the law and how would this  be carried out; and the effects on investment of 
far-reaching restrictions on expatr iate positions. He was confident that Nigeria would address the 
concerns expressed and work in order to ensure  compliance with its commitments under the WTO 
agreements. 
60. The representative of Canada shared the c oncerns expressed by the United States and the 
European Union regarding certain provisions whic h appeared to contain local content and looked 
forward to hearing Nigeria's responses to the r ecent set of questions from the United States. 
61. The representative of Japan indicated that Japan  was currently in a fact-finding stage with 
respect to these Nigerian measures.  However, he  shared the views and concerns expressed by the 
European Union, the United States and Canada a nd requested to hear further explanation on these 
issues, especially with regard to the local content requirements which seemed to be prominent in this 
respect.   
62. The representative of Nigeria confirmed that th is issue had been raised in the context of 
Nigeria's last trade policy review in June 2011 and that Nigeria had, in that context, responded to 
some of the concerns which were raised during that review. He also referred to the fact that bilateral consultations were held between the Nigerian a nd the United States' delegations on these issues. He 
added that his delegation was worki ng with Capital to come up with responses to the concerns raised 
by the United States and the European Union whic h he hoped to submit prior to the next Committee 
meeting.        G/TRIMS/M/31 
 Page 11 
 
 
  63. The Committee took note of the statements made. 
G. TRANSITIONAL REVIEW MECHANISM PURSUANT TO PARAGRAPH 18 OF THE PROTOCOL OF 
ACCESSION OF THE PEOPLE 'S REPUBLIC OF CHINA TO THE WORLD TRADE ORGANIZATION  
64. The Chairperson recalled that under Paragra ph 18 of China's Protocol of Accession 
(WT/L/432) the TRIMs Committee was required to revi ew annually, over a period of eight years after 
China's accession, the implementation by China of  the TRIMs Agreement and the related provisions 
of the Protocol of Accession, and to report to the Council for Trade in Goods (CTG) on the results of its review.  The eighth annual review of China had taken place on 16 Octobe r 2009, and the relevant 
report had been submitted to the CTG as document G/L/899. 
65. With respect to this year's review, the ninth an d final, the Chairperson said that in order to 
discharge its reporting obligations in a timely ma nner, the TRIMs Committee n eeded to undertake the 
review and submit its report in advance of the ne xt meeting of the CTG which was scheduled for 
7 November 2011.  Pursuant to para graph 18 of China's Protocol of Accession, the CTG would in turn 
report to the General Council by December 2011. 
66. The Chairperson said that the Committee had received a communication from China 
concerning information required under Annex 1A of  its Protocol of Accession, which had been 
circulated as document G/TRIMS/W/90.  She added that the Committee had also received a 
communication from Japan in connection with this review.  This communication was circulated in 
document G/TRIMS/W/85. 
67. The Chairperson proposed that, in keeping with previous practice, the Committee would 
conduct the review in the following manner:  she woul d first give the floor to the delegation of Japan 
that had submitted a communication in connection with  the review, and to any other delegation that 
wished to comment on this item.  She would then  invite the delegation of China to answer the 
questions posed and provide any other information it might wish to share with the Committee.    
68. The Committee so agreed.  
69. The representative of Japan welcomed generally China's efforts to simplify the verification 
processes for investment projects in recent years, in cluding efforts on decentralization, liberalization, 
and enhancement of transparency. However, there were still difficulties for foreign SMEs to follow 
the implementation of the verification processes, since a unified response could not be expected 
among different local governments. In this sense, fu rther transparency and predictably for foreign 
investors would be appreciated. He added that restri ctions on foreign capital participation remained in 
many sectors. For instance, commitments had been  made to open up certain sectors under the Law on 
Management of Foreign Investme nt in the Commercial Sectors, but the implementing regulations 
were not enforced yet. He indicated that China wo uld be required to enforce related regulations to 
fulfil its commitments. He submitted that although Ch ina had committed itself to fully comply with 
the relevant provisions under the TRIMs Agreement as well as its Accession Protocol, in particular 
paragraph 7.3 of Part I, performance requirements on local content or technology transfer still remain 
as impediments.  
70. On China's consistency with its commitments  under paragraph 7.3 of the Protocol, the 
representative of Japan noted that Japan was con cerned that the Government of China was still 
imposing a kind of technology transfer requirements on investments in the new-energy vehicles production.  He requested China to provide its view  in this regard. He indicated that it would be 
appropriate for China to refrain from intervening in the market in order to enhance the visibility and 
creditability of the Chinese market.  G/TRIMS/M/31 
Page 12  
 
  71. The representative of the United States recalle d that the TRM was created largely because 
China was admitted to the WTO Membership before it had revised all of its trade-related laws and 
regulations to become WTO-compatible, and because China was allowed a variety of transition periods before it took on certain WTO obligations . The annual TRM meetings, therefore, provided 
Members with opportunities to review with China, in  a multilateral setting, the efforts that China had 
taken to implement specific commitments made in its Protocol of Accession as well as China's efforts 
to comply with the obligations that it had taken on under the many agreements that made up the WTO 
Agreement.      
72. The representative of the United States indicated that looking back on past transitional 
reviews, the focus of these reviews had changed over  time. For the first five years of China's WTO 
Membership, the transitional reviews focused pr edominantly on the scheduled phase-in of key 
commitments that China had made in its Protocol of Accession. However, once that phase-in-period ended, and China could no longer be considered a new WTO Member, the focu s of the TRM shifted. 
At that point, the transitional reviews focused more  on China's adherence to the range of WTO rules 
that obligate all Members. She added that during the initial phase-in period, China implemented a set 
of sweeping commitments, including reducing tariffs , eliminating non-tariff barriers that denied 
national treatment and market access for goods and services imported from other WTO Members, and making legal improvements in intellectual property protections and in transparency. These actions 
deepened China's integration into  the international trading system, facilitating and strengthening 
China's rule of law and economic reform. Trade a nd investment also expande d dramatically between 
China and its many trading partners.    
73. The representative of the United States stated  that even though China had taken many 
impressive steps to reform its economy since joining the WTO ten years ago, the overall picture remained complex, given a troubling trend in China toward increased state in tervention in the Chinese 
economy in recent years. Frequently, trade frictions with China could be traced to China's pursuit of 
industrial policies that rely on excessive, trad e-distorting government intervention intended to 
promote or protect China's domestic industries and state-owned enterprises. This government 
intervention reflected that China' s rapid transition from a centrally planned economy to a free-market 
economy governed by rule of law remained incomplete.  
74. On developments relating to investment measu res in particular, the representative of the 
United States recalled that, as a result of its ac cession negotiations, China had not only taken on the 
obligations of the TRIMs Agreement, but also made additional commitments that Members had 
sought in order to discipline China's use of a variet y of investment restrictions. For example, China 
agreed to eliminate export performance, local cont ent and foreign exchange  balancing requirements 
from its laws, regulations and othe r measures, and not to enforce the terms of any contracts imposing 
these requirements. In addition, China agreed that it would no longer condition importation or 
investment approvals on these requirements or on requirements such as technology transfer and 
offsets. 
75. Furthermore, the representative of the Unite d States submitted that before and after its 
accession, China revised many laws and regulations  on foreign-invested enterprises to eliminate 
WTO-inconsistent requirements re lating to export performance, local content, foreign exchange 
balancing and technology transfer. However, some of  the revised laws and re gulations have continued 
to "encourage" technology transfer or the use of  local content, without formally requiring it. 
Moreover, even when laws and regulations had not expressly enc ouraged it, enterprises from the 
United States and other Members had continually re ported that some Chinese government officials, 
who retained a high degree of discretion when re viewing investment applications, still considered 
factors such as technology transfer and local content when deciding whether to approve an 
investment. She added that one sector that had been particularly hit with investment restrictions and 
related problematic policies designed to shie ld Chinese enterprises from foreign competition  G/TRIMS/M/31 
 Page 13 
 
 
  throughout China's ten years of WTO Membership was the auto sector. Unfortunately, these policies 
had included guidelines which appeared to conflict with China's WTO obligations. 
76. In addition, even though China had committed to  revise its industrial policy for the auto 
sector to make it compatible with WTO rules, the revised policy that China issued in 2004 included 
provisions discouraging the importation of auto  parts and encouraging the use of domestic 
technology. It also required new automobile and au tomobile engine plants to include substantial 
investment in research and development facilities, despite its commitment not to condition the right of 
investment on the conduct of research and develo pment. One of the measu res that emanated from 
China's revised auto policy was a 2005 regulation th at unfairly discriminated against imported auto 
parts and discouraged automobile manufactures in  China from using imported auto parts in the 
assembly of vehicles. In 2006, after bilateral di alogue failed to convince China to withdraw its 
regulation, the United States, the European Un ion and Canada initiated a WTO case challenging 
China's regulation as inconsistent with several  WTO provisions, including Article III of the 
GATT 1994 and Article 2 of the TRIMs Agreement,  as well as the commitment in China's accession 
agreement to eliminate all local content requireme nts relating to importation. A WTO panel and the 
WTO Appellate Body had both ruled in favour of th e United States and the other complaining parties 
and China repealed its regulation in 2009.    
77. The representative of the United States also expl ained that China had, more recently, taken a 
series of problematic actions related to the so-ca lled "new energy vehicles" or NEVs. For example, 
regulations issued by the National Development a nd Reform Commission in 2007 and the Ministry of 
Industry and Information Technology in 2009 required that the foreign manufactures' NEV 
investments in China be subject to project a pproval. Through this approval process, foreign 
manufacturers may be required to transfer sensitiv e technologies to their joint ventures with Chinese 
partners - the only investment mechanism through which foreign manufacturers may build vehicles in 
China - in order for any new NEV manufacturing facilities and new NEV models to be approved, 
given the regulations' requirement that the ma nufacturing entity in China should "hold" and 
demonstrate "mastery" of certain core NEV t echnologies. The regulations also required the 
manufacturers to set up research and development units  in China. These aspects of China's regulations 
had raised serious concerns in the United States a nd other Members in light of the commitment that 
China made not to condition investment on the tran sfer of technology or the conduct of research and 
development. 
78. Moreover, based on statements made by Ch inese government officials and reports from 
various non-governmental sources, it appeared that  China had begun to implement, or may soon 
implement, a number of other troubling policies re lating to NEVs, either through the exercise of 
discretionary authority by Chinese regulatory agen cies or the issuance of new regulations. In 
particular, China appeared to be imposing new requirements to sell NEVs in China only under 
Chinese brands, even though China committed to elim inate restrictions on the types of cars foreign 
enterprises produce or sell in China. Revisions to China's Foreign Investment Catalogue , currently 
under consideration, would limit foreign manufacturers to no more than 50 per cent of a joint venture 
to manufacture NEV parts, even though parts manufac turers (unlike manufacturers of whole vehicles) 
previously had been able to operate in Chin a through wholly foreign-owned enterprises. China 
appeared to have begun, or might soon begin, ma king substantial subsidies available in connection 
with the purchase of domestically produced NEVs, but not imported NEVs, raising national treatment 
concerns under Article III of the GATT 1994. China al so appeared to be considering incentives that 
would allow purchasers of domestically produced NEVs to complete automobile registration in municipalities like Beijing and Shanghai more quickly and easily.         
79. The representative of the United States also st ated that the steel sector was another sector 
which had been impacted by troubling investment restrictions since China acceded to the WTO. For 
example, the industrial policy for the steel sector that China issued in 2005 required that foreign G/TRIMS/M/31 
Page 14  
 
  investors possess proprietary technology or intellectual property in the processing of steel. Given that 
foreign investors were not allowed to have a cont rolling share in steel enterprises in China, this 
requirement would seem to constitute a de facto  technology transfer requirement, in conflict with 
China's commitment not to condition investment on the transfer of technology. This policy also appeared to discriminate against foreign equipment and technology imports. Like other measures, this 
policy encouraged the use of local content by callin g for a variety of government financial support for 
steel projects utilizing newly developed domestic equipm ent. It also called for the use of domestically 
produced steel-manufacturing equipment and domes tic technologies whenever domestic suppliers 
exist, apparently in contravention of the commitme nt that China made not to condition the right of 
investment or importation on whether co mpeting domestic suppliers existed. 
80. In a number of other sectors, the United States and other Members had become increasingly 
concerned over the last few years about new r estrictions on investment being proposed and 
implemented by China. Often, these restrictions were accompanied by other problematic industrial policies, such as the increased use of subsidies, preferences for using domestic rather than imported 
goods, and the development of China-specific standard s. Many of these investment restrictions could 
be traced to a five-year plan, issued in 2006, which sought to restrict foreign enterprises' acquisition of 
"dragon head" enterprises, prevent the "emergence or expansion of foreign capital monopolies", 
protect national economic security, particularly "ind ustry security", and prevent "abuse of intellectual 
property". China's investment restrictions – includi ng the restrictions that China placed on foreign 
acquisitions of Chinese companies, which went be yond genuine national security concerns – had run 
counter to the market-oriented principles that were  the basis for much of China's economic success 
over the past few decades. Indeed, these types of invest ment restrictions were more likely to retard the 
growth and development of the Chinese economy than to accomplish the state planners' ultimate objective of creating internationall y competitive domestic enterprises. 
81. Finally, the representative of the United States me ntioned that in the area of investment, like 
many other areas, it appeared that China had made  progress but had not yet implemented all of the 
cross-cutting transparency commitments that it made  when it acceded to the WTO, and that serious 
concerns remained, even after ten years of the WTO Membership. 
82. First, with regard to China's commitment to publish all laws, regula tions and other measures 
pertaining to or affecting trade in goods or services (as set forth in paragraph 331 of China's Working 
Party Report), China had complied with this commitment in many respects. However, it still did not appear that China had published measur es that provided "internal guidance".  
83. Second, with regard to China's commitment to publish measures for comment before 
implementing them (as set forth in paragraph 2 (C ) 2 of Part I of China's Protocol of Accession), 
China had made improvements, but it appeared that  China had still not institutionalized a notice-and-
comment mechanism for all Chinese agencies. To date, while the State Council had been regularly 
publishing proposed regul ations for public comment, it appeared that Chinese agencies had had more 
difficulty publishing proposed departmental rules and other proposed measures. The United States 
noted that, in case of the NEVs discussed previous ly, while proposed revisi ons to China's Foreign 
Investment Catalogue were published for public comment, other proposed measures had not been 
made public, even though it appeared that Chinese government officials might already be 
implementing some of them. 
84. Third, with regard to China's commitment to make available all laws, regulations and other 
measures pertaining to or affecting trade in goods or services in one or more WTO languages (as set 
forth in paragraph 334 of China's Working Part y Report), it appeared that China had made no 
progress in implementing this important commitment.   G/TRIMS/M/31 
 Page 15 
 
 
  85. Going forward, the representative of the Unite d States urged China to reconsider its heavy 
reliance on investment restrictions as a tool of i ndustrial policy. She also ur ged China to review its 
existing investment restrictions, particularly in the auto and steel sectors, in light of its WTO 
commitments and make appropriate revisions where necessary. She concluded by indicating that the 
United States would continue to e ngage with China, both in the Committee and bilaterally, until these 
outstanding issues were satisfactorily resolved.  
86. The representative of Mexico indicated that there was no doubt that the accession of China 
had marked an important step for the multilateral trading system. The importance of China in the 
multilateral trading system had required great monitoring of its commitments within the framework of its accession to the WTO. He noted that China made important progress in terms of FDI, the 
elimination of certain requirements such as export performance and local content requirements, but 
noted that there were many concerns which inte rested foreign companies had with regard to 
performance requirements and the recruiting of local staff, among other things. He was of the view 
that this was not in line with paragraph 203 of th e Report of the Working Party on the Accession of 
China which stated that the allocation, permission or rights of importation and investment would not 
be conditional upon performance requirements set by nati onal or sub-national authorities, or subject to 
secondary conditions covering, for example, the con duct of research, the provision of offsets or other 
forms of industrial compensation including specifi ed types or volumes of business opportunities, the 
use of local inputs or the transfer of technology.  He also recalled that paragraph 49 of China's 
Protocol of Accession stated that China would not impose any requirements pertaining to the transfer 
of technology which were not compatible with the TRIMs Agreement. He finally submitted that this 
had given rise to concerns within the private sect or in Mexico and urged China to review these 
measures in line with the commitments  it took upon its accession to the WTO. 
87. The representative of the European Union indicated  that after ten years of its accession to the 
WTO, China has moved from being an emerging economy to a global economic power. Its WTO 
Membership had certainly not been alien to its im pressive transformation; as a corollary, it was also 
expected that China's domestic policies and measu res would fully abide by WTO rules and be duly 
designed and implemented in line with the commitments  made in the run up to its accession. He noted 
that this TRM had provided the WTO Members with the opportunity to review the implementation of these commitments. He added that, like many other Members, the European Union had made active 
use of this TRM throughout the process – be it ora lly or via written submissions – and thanked China 
for its cooperation. He also thanked China for subm itting, though belatedly, the information prior to 
this meeting
2 in accordance with Article 18.1 and Annex 1A of China's Accession Protocol.  
88. The representative of the European Union had welcomed China's overall efforts to enhance 
transparency as far as the investment approva l process and publication and consultation on new 
legislative initiatives which impact investment we re concerned. However, he submitted that the 
European Union had also noted that investment a pproval in China remained a very difficult process 
and that there were no clear "one-stop" shops pert aining to these approval procedures and that further 
streamlining would be appreciated. In 2011, the Ch inese government published a draft revision of the 
Catalogue for the Guidance of Foreign Investment  Industries, which listed the sectors in which 
foreign direct investment was either encouraged, re stricted or prohibited and would eventually update 
the 2007 version of the Catalogue. The European Union had also welcomed the opportunity to comment in the public consultation and has submitted  comments to China, but would like to receive 
some update on the next steps in this process.  He also regretted that in its draft version, the revised 
Catalogue did not substantiv ely remove restrictions for sectors a nd had even added some sectors, such 
as postal and courier services to the list of prohibited sectors.  
                                                      
2 G/TRIMS/W/90. G/TRIMS/M/31 
Page 16  
 
  89. The representative of the European Union note d that China continued to maintain an 
investment environment where all foreign investme nts appear to be subject to some form of 
government approval.  The European Union welcomed  the steps undertaken in the past to facilitate 
the approval process by increasing the threshold unde r which sub-central authorities could approve 
foreign investments. However, the Chinese investment environment continued to include many 
restrictions on foreign investment, including comple te bans on foreign investment in certain sectors, 
reflecting the government's continued role  as a very active manager of the economy.  He emphasized 
that in the future more restrictions should be lifte d. In this context, the European Union had been 
concerned about the new national security screeni ng mechanism for foreig n investment through 
mergers and acquisitions of domestic Chinese enterp rises. While national security concerns were of 
course important, he stressed that national security  had to remain a narrowly defined concept and 
should not be used beyond what would be proporti onate. In particular, the European Union was 
concerned about the retroactive applicability of this screening mechanism,  which seemed to allow 
China to even force disinvestments with no timefra me for already established foreign enterprises. He 
urged China to implement such measures ensuring tr ansparency and predictability.  Furthermore, 
while the European Union recognized that China ha d revised many laws and regulations on foreign-
invested enterprises to eliminate WTO-inconsistent  requirements relating to export performance, local 
content, foreign exchange balancing and technology  transfer (as required by China's Protocol of 
Accession, part I, paragraph 7.3, and China's Work ing Party Report, paragra ph 203), he believed that 
this process had not been finalized and encouraged  China to ensure these requirements were fully 
removed. 
90. The representative of the European Union added th at it regrettably appeared that the Chinese 
Government continued to pressure foreign companies to transfer technology, use local content or set 
up research facilities in China. These requirements were still contained in certain joint-venture 
operations. In particular, he e xpressed concern about this in the area of new energy vehicles 
production. He referred to his delegation's earlier statem ents in this respect in this Committee, and to 
documents G/TRIMS/W/60 (14 October 2008) and G/TRIMS/W/69 (5 October 2009), and indicated 
that the European Union would remain concerned w ith the joint-venture requirements and the "2+2" 
regulation that was severely limiting foreign invest ment opportunities in the automobiles and auto-
components sector. In a sector which had now become the world's largest, protection of infant industry was an argument that could no longer hold.  Therefore, the European Union would once again 
encourage China to completely eliminate these require ments in all cases with a view to really pursue 
the consolidation of the automobile industry. 
91. Another example where the European Union rema ined concerned about restrictive conditions 
for foreign investors was the wind power sector. Th e representative of the European Union submitted 
that while localization requirements might have been  removed, serious limita tions persisted, that 
would effectively hinder foreign investors from partic ipating in this market, for instance by requiring 
that wind turbine generators be produced domestical ly. Foreign developers c ould only participate in 
offshore wind projects via Chinese-controlled jo int ventures. Another additional worrisome 
development was the issuance of measures aiming at the exclusion of foreign-invested enterprises 
from the implementation of Clean Development Mechanism projects. 
92. Finally, the representative of the European Uni on stated that his delegation would monitor all 
those important issues. He believed that, within its  remit, this Committee would continue to provide 
an appropriate forum for spurring Me mbers to ensure that their trade regimes were fully in conformity 
with the rules of the multilateral trading system, to the benefit of the whole WTO Membership.  
93. The representative of China started by respondi ng to the question posed by Japan concerning 
the Rules on the Access of New-Energy Vehicle Manufacturers and Products . He also referred to the 
statements made by the United States and the Europ ean Union in which the relevant policies of the 
Chinese government were mentioned. He explained that  with respect to the specific rules on the new  G/TRIMS/M/31 
 Page 17 
 
 
  energy vehicles and following consu ltations with the relevant Chinese authorities, it became apparent 
that Members had probably misunderstood some of the Chinese measures or policies. He clarified that the rules themselves did not impose TRIMs inconsiste nt compulsory technology transfer requirements 
as understood by China's trading partners. He explaine d that what was specified  in the rules was that 
the manufacturers, both foreign and domestic, shoul d indeed have their own key technology in the 
area of new energy vehicle manufacturing, but that did not mean that the technology owned by 
foreign investors should be transferred. The Chinese au thorities were of the view that since this sector 
was relatively new and still at an early stage of technology development and industrialization, such 
requirement would be necessary at this stage to guara ntee the safety and quality of the products and to 
demonstrate the effectiveness of the product' s performance as a new energy vehicle.  
94. The representative of China also re ferred to China's efforts in the past ten years with regard to 
the implementation of China's TRIMs-related commitm ents. He explained that as reflected in all the 
nine submissions provided by China to the Committe e pursuant to Annex 1 (A) of China's Protocol of 
Accession, China had seriously fulfilled its commitm ents with respect to the TRIMs Agreement. 
Furthermore, China had also been engaged in discu ssions and consultations w ith Members in an open 
and candid spirit on issues concerning China's TRIMs with the aim that the implementation of these 
measures would be consistent with  the requirements of the TRIMs Agreement. Such exchanges had 
by no means been limited only to this item of the Committee meeting's agenda.  
95. The representative of China indicat ed that China would continue to take rights and obligations 
in the WTO seriously, including those under the TR IMs Agreement.  He had taken note of the 
concerns and views expressed by some other Member s in their previous statements and it was not 
surprising that Members had either misunderstandi ngs or concerns on some of China's policies, 
particularly in the industrial policy area. On that part icular issue, he stated that China as a sovereign 
state had the right to design its regimes including th at concerning foreign investment. He also stated 
that China, in  the welfare of its own people and to achieve economic progress and development, 
certainly had the right to design its own policies and measures which it believe d to be important and 
adequate. However, in this course, China and other WTO Members shared a common ground of WTO 
rules and principles including those of the TRIMs Agreement. He expressed China's readiness to 
continue its discussions with Members b ased on these common rules and principles.  
96. The representative of China assured the Committe e that China would continue to further 
expand its opening up to foreign investment, and the la test move of China in this respect was reflected 
in the latest submission made by China to th e Committee as contained in document G/TRIMS/W/90, 
that is, as noted by the European Union, China w as revising its Catalogue for the Guidance of Foreign 
Investment Industries, and in this revision Chin a would open up some sectors further to foreign 
investment. He concluded that China's excha nge with Members on TRIMs-related issues would 
certainly continue in view of China's further opening and that the end of this transitional review would 
not mean the end of China's communication with other Members.  China would continue to 
participate in the activities of this Committ ee in an open and cooperative spirit.    
97. The Chairperson said that with regard to the Committee's reporting obligation to the CTG, she 
understood that Members would wish the Committee to follow the same pro cedure that had been 
adopted in previous years, i.e. the Chairperson would submit a brief, factual report, which would include references to the submissions made in conn ection with this year's Review and would contain 
in the Annex the relevant parts of the Minutes of th is meeting.  She indicated that she had taken the 
liberty of asking the Secretariat to prepare a draft outline of her report for Members' consideration.  
This had been circulated as document G/TRIMS/W/84.  If Members agreed to this outline, and once the relevant section of the Minutes had been attached  to it, she would forward the report to the CTG
3.  
                                                      
3 G/L/963. G/TRIMS/M/31 
Page 18  
 
  98. The Committee took note of the statements made under this item and agreed on the proposed 
procedure to discharge its reporting obligations concerning China's TRM.  
H. OTHER BUSINESS  
99. No Member raised any issues under this agenda item.   
I. DATE OF THE NEXT MEETING  
100. It was agreed that the next regular mee ting of the Committee be held on Monday, 
1 October 2012.  The air gram convening the meeti ng would be circulated to all Members on Friday, 
21 September 2012.  The last date for inscription of  items on the agenda of the meeting would be 
Tuesday, 18 September 2012, by close of business.   
J. ANNUAL REPORT (2011) 
101. The Chairperson stated that Article 7.3 of the TRIMs Agreement required the Committee to 
report annually to the CTG.  As a basis for th e Committee's consideration of this matter, the 
Secretariat had prepared a draft annual repo rt, which had been circulated in document 
G/TRIMS/W/83.  The report was updated, as appropria te, to take account of the present meeting.  She 
then invited reactions and comments from Me mbers on the proposed draft report.   
102. The Committee adopted the Annual Report (2011).4  
K. ELECTION OF THE CHAIRPERSON  
103. The Committee elected Mr. Patrick VAN GHEEL (Belgium) to hold office until the end of 
the first meeting of 2012.  
 
___________________ 
                                                      
4 G/L/964.    G/TRIMS/M/31 
 Page 19 
 
 
  ANNEX 
  
April 2007 
 
S&D CATEGORY II PROPOSALS ON THE TRIMS AGREEMENT 
 
Revised proposal received from the delegation of Kenya on behalf of the African Group 
 
 
Proposal related to Article 4 of the TRIMs Agreement 
 
Members shall interpret and apply Article 4 of th e TRIMs Agreement in acco rdance with the balance-
of-payments provisions referred to in Article 4 of the TRIMs Agreement, and in a manner that fully 
supports measures taken by developing and least -developed country Members to safeguard their 
external financial position, balance-of-payments an d sufficiency of reserves, taking full account of 
paragraph 1.1 of the Ministerial Decision on Implementation-Related Issues and Concerns.1  
 Members shall interpret and apply Article 4 of  the TRIMs Agreement in accordance with the 
provisions of Article XVIII of GA TT 1994 referred to in Article 4 of the TRIMs Agreement, and in a 
manner that fully supports measures taken by de veloping and least-developed country Members to 
promote the establishment of a particular industr y, taking full account of paragraph 1.1 of the 
Ministerial Decision on Implementati on-Related Issues and Concerns.
2   
 
 In considering requests to apply TRIMs unde r Article XVIII of the GATT 1994, Members 
shall take into account any difficulties encountered by least-developed and developing countries in meeting the notification and consultation requirements contained in 
Article XVIII, paragraphs 14 to 19, and the WTO Secretariat shall accord them such technical 
assistance and support as they may need in order to prepare their notifications and to carry out those consultations.   
 In order to assist least-developed and other low-income developing  countries whose 
dependence on primary production is partic ularly high and whose overall level of 
industrialisation is particularly low to accel erate their industrialisation process and to 
diversify the structure of their economies in line with the objective recognized in 
Article XXXVI:5 of the GATT 1994 and its Ad No te, the phrase "free to deviate temporarily 
from the provisions of Article 2" that is contai ned in Article 4 of the TRIMs Agreement shall 
be understood to refer, in the case of these c ountries, to a reasonable period of time sufficient 
to establish the particular industry in question on a competitive footing. 
 
Proposal related to Article 5.3 of the TRIMs Agreement 
 
Further to the Hong Kong Ministerial Decision in  favour of least-developed countries on Special 
and Differential Treatment relating to the Agre ement on Trade-Related Investment Measures3, 
other low-income developing countries that demonstrate difficulties in implementing the provisions 
of the TRIMs Agreement shall be provided with a new opportunity to notify TRIMs and to request 
transition periods to eliminate the measures.   
                                                      
1 Paragraph 1.1 of the Ministerial Decision on Implementation-Related Issues and Concerns, adopted 
on 14 November 2001, "reaffirms that Article XVIII of  the GATT 1994 is a special and differential treatment 
provision for developing countries and that recourse to it should be less onerous than to Article XII of the 
GATT 1994". 
2 Ibid. 
3 WT/MIN(05)/DEC. G/TRIMS/M/31 
Page 20  
 
  With regard to requests made in this area by least-developed and other low-income developing 
country Members under Article IX of the WTO Agreement,  account shall be taken of their particular 
circumstances when setting the te rms and conditions, including ti me-frames, under which transition 
periods are granted.  
__________