RESTRICTED  WORLD TRADE  
ORGANIZATION  G/TRIMS/M/29 
30 November 2009 
 (09-6049) 
Committee on Trade-Related Investment Measures  
 
 
 
MINUTES OF THE MEETING HELD 
ON 16 OCTOBER 2009 
 
Note by the Secretariat  
 
 
1. The Committee on Trade-Related Investment Measures (the "Committee") met on 
16 October 2009.  The meeting was opened by Mr. Jesse Kreier, Counsellor, Rules Division on behalf 
of Mr. Johann Human, the Director of the Rules Division and conducted under the Chairpersonship of 
Dr. Octavia Cerchez (Romania) (see it em A below).  The Committee adopted  the agenda contained in 
WTO/AIR/3444.   
A. ELECTION OF THE CHAIRPERSON  
2. At its formal meeting of 20 May 2009, the Co mmittee elected Mr. Vasile Radu (Romania) as 
its Chairperson for the period 2009-2010.  In a le tter dated 30 June 2009, the Permanent Mission of 
Romania informed the Secretariat that due to unf oreseen circumstances, Mr. Radu would not be able 
to fulfil his duties as the Chairperson of the Committee.  At its meeting of 7 October 2009, the 
Council for Trade in Goods agreed on Dr. Octavi a Cerchez to become the Chairperson of the 
Committee.  On 16 October 2009, the Committee formally elected  Dr. Octavia Cerchez (Romania) as 
its Chairperson for the period 2009-2010.   
B. NOTIFICATIONS UNDER ARTICLE 6.2 OF THE TRIM S AGREEMENT  
3. 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, notifications under Article 6.2 
had been received from Malaysia and Saudi Ar abia and that Thailand had submitted an updated 
notification.  She noted that the latest compilation of all notifications that had been made under this 
provision was contained in document G/TRIM S/N/2/Rev.19, dated 30 September 2009.   
4. 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 
decision require each Member to notify the Secretar iat of the names of publications in which TRIMs 
might be found, where such publications exist, including those applied by regional and local 
governments and authorities within their territori es, and the addresses from which copies could be 
obtained, without prejudice to the legal consiste ncy of any TRIM which might be found in the 
publications notified.   
5. She reiterated that the obligation to provide publications related to all TRIMs Members 
maintain, not necessarily those inconsistent with th e TRIMs Agreement, but those consistent with the 
Agreement too.  In other words, in case a Member  had no TRIMs which were inconsistent with the 
TRIMs Agreement, but maintained TRIMs consiste nt with the TRIMs Agreement, that Member 
would have an obligation to report all publi cations where such TRIMs might be found.   G/TRIMS/M/29 
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  6. 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 Secret ariat had issued the first reminder in this regard 
which was circulated as document G/TRIMS/W/62 da ted 24 June 2009.  She strongly urged Members 
that had not provided their notifications to date , 49 Members to be exact, to provide such a 
notification promptly and those who had provide d it some time ago to have it updated.   
7. The representative of the European Communities
 indicated that the European Communities 
had, across various WTO Committees, supported effort s for increased transparen cy in notifications, 
and led by example notably in notifying its own m easures in the context of the Trade Policy Review 
Body monitoring exercise.  He stated that ther e could be room for further work on improving the 
implementation of existing notification mechanisms, and welcomed the attention the Chairperson had 
been placing on this issue.   
8. He added that the European Communities made considerable efforts to satisfy their own 
requirements and that they were now in a position to cl ose most of the gaps that had been identified.  
He anticipated that the European Communities w ould shortly submit updated information concerning 
the European Communities and its Member States' publications in which TRIMs might be found.   
9. The Committee took note of the statements made and agreed  to revert to this item at a future 
meeting.   
C. PROPOSALS ON SPECIAL AND DIFFERENTIAL (S&D)  TREATMENT PROVISIONS RELATED TO 
THE TRIMS  AGREEMENT  
10. 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 relate to Articles 4 and 5.3 of the TRIMs Agreement.  In April 2007, Kenya 
on behalf of the African Group submitted a revised version of the proposals, which deals more 
specifically with the concerns of the proponents (see Annex).   
11. 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 have been 
received from the proponents since then.   
12. The latest revision of the African Group's proposals was annexed to the Minutes of the 
October 2008 meeting containe d in document G/TRIMS/M/27 .  The discussion of the revised text that 
took place at the informal consultations in J une and October 2007 and at the November 2007 
meeting of the TRIMs Committee is reflected in the Minutes of that meeting [G/TRIMS/M/26, 
paragraphs 4-9] .   
13. 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.    G/TRIMS/M/29 
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  14. At the meeting of 23 October 2008, the Chairp erson's predecessor expr essed his readiness to 
continue his informal consultations on this issu e, should Members so wish, and report back to the 
Committee and the General Council at an appropr iate time on any further developments.   
15. Since the last regular meeting in October 2008,  no delegation contacted the Chairperson or 
the Secretariat to request the continuation of th e informal consultations in this regard.   
16. At the meeting of 16 October 2009, the Chairperson opened the floor for comments on this 
issue, but no Member took the floor and she thus indicated that she had nothing to report to the General Council.  However, she indicated her read iness to continue informal consultations on this 
issue, should Members so wish, and report back to the Committee and the General Council at an 
appropriate time on any further devel opments.  She requested all interested Members to contact her or 
the Secretariat, if they wished such consultations to be conducted.   
17. The Committee took note
 of the Chairperson' statement made.   
D. CERTAIN NEW AND PROPOSED MEASURES BY INDONESIA ADDRESSING LOCAL CONTENT IN 
INVESTMENT IN TELECOMMUNICATIONS SECTOR – REQUEST BY THE EUROPEAN 
COMMUNITIES AND THE UNITED STATES  
18. The Chairperson recalled that, at its meeti ng on 20 May 2009, the Committee considered a 
joint communication submitted by the European Co mmunities and the United States, entitled "Certain 
New and Proposed Measures by Indonesia Addressi ng Local Content in Investment in the 
Telecommunications Sector" contained in documen t G/TRIMS/W/61.  The communication contained 
a list of questions posed by the proponents which basically laid out the areas where information and 
further clarifications were requested from Indonesi a.  A discussion took place at the Committee in this 
respect and further informal consultations were he ld amongst interested delegations.  Written answers 
to the written questions of the proponents were submitted by Indonesia and circulated in document 
G/TRIMS/W/63.  The European Communities and th e United States requested that this issue be 
placed once more on the agenda of the regular meeting in October 2009.   
19. The representative of the United States  expressed his appreciation for the responses Indonesia 
provided to the questions from the United States and the European Communities relating to certain 
measures applicable to investment in the tel ecommunications area which appear to impose local 
content requirements in a manner not in accordance with  the TRIMs.  He clarified that this issue was 
not only raised in this Committee, but also on a bila teral basis with Indonesia, and appreciated that the 
Indonesian Government had been willing to provi de some information on these programmes.   
20. He also noted, for the information of Members of the Committee, that the United States had 
also filed comments with the relevant telecommunica tion authority in Indonesia in the context of the 
administrative proceeding pursuant to which it is considering the draft telecommunications decree.  He indicated that the United States would be inte rested in hearing from Indonesia any update on the 
status of all of the measures which the United States raised in its comments.   
21. He anticipated that the United States might ha ve further questions on this matter which it 
would circulate to the Committee.  However, it rai sed certain initial questions concerning the answers 
that were provided.   
22. He indicated that in response to the fi rst question from the United States and the 
European Communities, Indonesia indicated that "Decree No. 38/2007" related to the Universal 
Service Obligation (USO) programme to provide te lecommunications services to under-served areas.  
Based on this response, it appeared that the local content requirement would apply ONLY to a 
recipient of funds from the USO programme.  He inquired whether this piece of information was G/TRIMS/M/29 
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  correct and where such information was stipulated in the relevant decree which appeared to impose 
local content requirements on ALL operators?   
23. He also inquired about the basis for concluding that that because USO funds were involved, 
this was somehow "government procurement" and thus outside the scope of TRIMS.  He asked 
whether it was true that the funds for USO actually  came from the operators themselves, who paid 
into a fund which was then ava ilable for USO support.  In addition, he inquired about the entities 
which would be undertaking the projects.  He indicated that although a large number of WTO Members had universal service programmes, the United States was unaware of any other Member that asserted that conditions attached to disbursement of USO funds were exempt from the 
obligations of the TRIMS Agreement.   
24. Regarding questions 2-4 on the "Wireless Broa dband Decree", Indonesia had said that this 
decree was not intended to regulate trade in goods.  He inquired if this comment could mean that in 
Indonesia's view this decree did not implicate the TRIM s, and if so, this response would be difficult to 
understand.  Although provision of broadband telecommunications itself might be a service, the bulk 
of the capital expenditures by the companies involve d in that area (the so-called "CAPEX") would go 
to the purchase of equipment.  Hence, trade in goods  would be very much impacted by this decree.   
25. Regarding questions 5 and 6 on the draft tele communications decree, he appreciated an 
update from Indonesia on the current status of the Indon esian government's consideration of that draft.   
26. The representative of the European Communities
 stated that this issue was of considerable 
concern to the European Communities and that wh ile they appreciated the answers that Indonesia 
provided following the meeting of 20 May 2009, they  would be grateful if Indonesia could provide 
further clarifications in respect of several elements of its telecommunications legislation.  He added 
that the European Communities might circulate to th e Committee a more precise set of questions at a 
later stage, but for now the European Communities ha d a set of preliminary questions and remarks.   
27. On the answer provided by Indonesia to the first question contained in document 
G/TRIMS/W/61, he inquired whether Indonesia coul d provide the Members of the Committee with a 
version of the Decree No. 32/2008 eventually translat ed into English.  He also noted that in its 
response, Indonesia referred to "Decree No. 38/ 2007, as amended by the Decree No. 32/2008" and 
requested Indonesia to clarify the legal relationship between Decree No. 32/2008 and 
Decree No. 11/2007 as amended by Decree 38/2007.  In addition, he inquired whether Indonesia could describe in detail the procedures according to  which the funding of the projects would take 
place.  Furthermore, he added that the Decree 38/ 2007 contained in its Article 18 made reference to 
"Capital Expenditure" and "telecommunications de vices" and inquired whether Decree 32/2008 also 
contained such terms and if so , how it would define them.   
28. Regarding the answers provided by Indonesia to questions 2-4 contained in document 
G/TRIMS/W/61, the representative of the European Communities indicated that the European Communities had difficulties in understanding the argument that Decree No. 7/2009 "does 
not regulate goods but CAPEX and OPEX".  He noted  that capital expenditures of companies might 
well be devolved to the purchase of equipments , which were "goods".  He also noted that 
Decree No. 7/2009 did not mention CAPEX and/or OPEX  but instead referred in Articles 16 and 17 
to "equipment/tools" which were "goods".   
29. With respect to the answers provided by In donesia to the questions 5 and 6 from the 
European Communities and the United States, he re quested Indonesia to provide Members with an 
update on the current status of the draft telecommunication decree.    G/TRIMS/M/29 
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  30. The representative of  Indonesia  thanked the European Communities and the United States for 
the questions.  On the status of the draft telecomm unications decree, he indicated that so far he was 
not aware of any progress on this front.  With respect to the further clarifications requested pertaining 
to Indonesia's answers to questions 1-6 contained in  document G/TRIMS/W/63, he stated that he was 
not in a position to provide such clarifications and requested both Members to provide their questions 
in writing.   
31. The representative of Canada  supported the statements made by the European Communities 
and the United States and expressed interest in m onitoring any developments in this area.   
32. The representative of Japan  made two comments with respect  to this issue.  The first 
pertained to Indonesia's answers to question 1.  She requested more clarification from Indonesia in 
defining what "operators to execute the proj ect(s)" meant.  She indicated that by reading 
paragraph 18 (b) of the Decree, it seemed that the local content requirement was based upon such 
operators to execute the project(s).  In this cont ext, the representative of Japan inquired whether this 
process could be considered as government procur ement and how it was relevant to the TRIMs 
Agreement. 
33. The second issue had to do with the Indonesian r esponses to questions 4 and 5.  She stated 
that Japan understood that even if the decree was not a direct regulation of trad e in goods, it could still 
have a significant effect on goods trade as long as it imposed a local content requirement.  In this regard, she indicated that Japan would like to expr ess its continued doubt over the consistency of this 
decree with paragraph 2 of the TRIMs Agreement.   
34. The representative of Korea
 supported the statement made by Japan.   
35. The representative of Indonesia  requested Japan to provide its questions in writing.   
E. CERTAIN INDONESIAN LAWS AND DRAFT IMPLEMENTING REGULATIONS ON MINERAL AND 
COAL MINING – REQUEST BY THE EUROPEAN COMMUNITIES AND THE UNITED STATES  
36. The Chairperson indicated that this item was pl aced on the agenda upon the request of the 
European Communities and the United States.  She added that on 9 October 2009, the 
European Communities and the United States subm itted a joint communication, entitled "Certain 
Indonesian Laws and Draft Implementing Regulations on Mineral and Coal Mining" and circulated in 
document G/TRIMS/W/70 dated 9 October 2009.   
37. The representative of th e European Communities  indicated that they had received reports on 
developments regarding an Indonesian law and dr aft implementing regulations on mineral and coal 
mining.  While still waiting for the adopti on of its implementing regulations, the 
European Communities was concerned that the law on mineral and coal mining might contain 
provisions imposing local content and restricting e xports, the compatibility of which with the TRIMs 
Agreement as well as with the GATT 1994 was uncertain.   
38. He added that in order to shed light on various  aspects of the mineral and coal mining law, the 
European Communities together with the United States submitted to Indonesia a list of specific 
questions in document G/TRIMS/W/70.  He request ed Indonesia to provide Members with an update 
on the legislative status of the draft implementing regulations along with a translated copy.   
39. The representative of the United States  stated that the US' attention had been drawn to a law 
passed by Indonesia in the Spring of this year.  Alt hough the translation the United States had of this 
law was somewhat unclear, and the implementing re gulations were still in  draft form, several G/TRIMS/M/29 
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  provisions could be understood to impose local cont ent requirements and /or restrictions on exports 
inconsistent with the TRIMs Agreement.   
40. He explained that the United States had raised questions with Indonesia to seek clarity with 
respect to the interpretation of these provisions and hoped that Indonesia could provide up-to-date 
information in this respect.   
41. As an initial matter, he requested a report on the status of the draft regulations, and a 
translated copy of the current draft of the regula tions.  He added that the United States understood that 
this might have been already provided to some stakeholders.   
42. The representative of Canada
 thanked the European Communities and the United States for 
bringing this matter to the attention of the Committe e.  He indicated that Canada had been following 
the developments of the new mining law with great interest and that it was concerned that this law 
could impact current and future foreign mining investme nts in Indonesia.  He stated that the long term 
and capital-intensive nature of the mining industry re quired stability and predictability for investors.  
He hoped that the forthcoming impl ementing regulations would provide  certainty and consistency in 
the mining sector in Indonesia.  The representative of Canada strongly urged Indonesia to work with 
the stakeholders and take the necessary time to ensu re a balanced approach to this legislation and 
ultimately establish an effective new framework.   
43. The representative of Indonesia  thanked Canada, the European Communities and the 
United States for the questions.  He  indicated that the Indonesian G overnment had issued the Law on 
Mineral and Coal Mining No. 4/2009 on 12 January 2009 .  He added that he was not aware that any 
implementing regulations were in place.  He stated that he was not in a position to provide additional 
clarifications, but promised to pursue the matter wi th capital and respond to the questions posed.  He 
requested to receive the oral questions posed in writing.   
F. TRANSITIONAL REVIEW MECHANISM PURSUANT TO PARAGRAPH  18 OF THE PROTOCOL OF 
ACCESSION OF THE PEOPLE 'S REPUBLIC OF CHINA TO THE WORLD TRADE ORGANIZATION  
44. The Chairperson  recalled that under Paragraph 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 seventh annual review of China had taken place on 23 October 2008, and the relevant 
report had been submitted to the CTG as document G/L/859.   
45. With respect to this year's review, the eighth, the Chairperson said that in order to discharge 
its reporting obligations in a timely manner, th e TRIMs Committee needed to undertake the review 
and submit its report in advance of the next meeting of the CTG which was scheduled for 
30 October 2009.  Pursuant to para graph 18 of China's Protocol of Accession, the CTG would in turn 
report to the General Council by November 2009.   
46. 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/64.  She added that the Committee had also received communications from the European Communities, Japan and the United States which contained 
comments and questions to China in the contex t of this review.  These communications were 
circulated in documents G/TRIMS/W/69, G/TRIMS/W/68, and G/TRIMS/W/67, respectively.   
47. 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 delegations of the  G/TRIMS/M/29 
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  European Communities, Japan and the United States th at had submitted questions to China, and to any 
other delegation that wished to comment on this item.   She would then invite the delegation of China 
to answer the questions and provide any other inform ation it might wish to share with the Committee.   
48. The Committee so agreed .   
49. The representative of the European Communities  welcomed the opportunity to participate in 
the Eighth TRM exercise for China in the Committ ee.  He indicated that despite the impressive 
progress China has made in integrating into the rules-based world trading system, WTO Members 
were still confronted with some important areas of co ncern.  He considered this review mechanism to 
be an important forum for addressing such concerns a nd encouraged China to participate actively in it, 
as well as to respond to Members' questions in a s ubstantive manner in the course of the meeting and 
in a written form following the meeting.  He referred to the communication circulated in 
document G/TRIMS/W/69 on 5 October 2009 which had set in detail the concerns of the 
European Communities.  Some of the comments cont ained in this document were raised in earlier 
TRM exercises in the Committee, as well as bilaterally, but they might have not been addressed in a 
fully satisfactory manner.   
50. The representative of the European Communities ex plained that the first key issue was that 
pertaining to local content requirements.  He st ated that the European Communities took note of 
China's position that it had honoured its accession commitments with respect to the elimination of local content requirements.  Ho wever, the European Communities remains concerned about reports 
from industry that the local content requirements c ontinue to be applied in China across several 
sectors, especially at the local level.  He request ed China to provide information on measures it would 
foresee to address this situation and an assessment of  how the various review mechanisms that were 
available for industry would have resulted in lo cally applied local content requirements being 
rectified.   
51. The second key issue was the European Communities' long-standing concerns regarding 
China's Steel Industry Development Policy.  Th e representative of the European Communities 
continued to urge China to lift its foreign ownershi p limits so that investment decisions could be 
based on sound and objective foundations.  He also requested China to provide written information on 
the criteria used to define requirements pursu ant to Article 23 as well as further information 
concerning the details of Article 18 of the NDRC Steel Industry Development Policy.   
52. The third key issue was the clauses containe d in contractual arrangements that were 
incompatible with China's obligations under its  Accession Protocol.  The representative of the 
European Communities invited China to elaborate fu rther on this application process, in particular 
how China monitored it so as to en sure its compliance with the TRIMs Agreement.  In addition, he 
requested China to clarify how it ensures that the approval for investment by  national and sub-national 
authorities was not conditioned on either performance  requirements or local content requirements of 
any kind.   
53. The fourth key issue was the Joint Ventur e Ownership Limitations.  During previous 
transitional reviews before the Committee, China argued that it had "the legitimate right to 
independently judge on the level of maturity of specific industries and to decide on the speed of 
investment liberalization".  The representative of the European Communities inquired about the 
progress China had achieved in opening certain key sectors for foreign investment since the last 
transitional review in 2008.  He also requested Chin a to elaborate on the time frames it could foresee 
for further investment liberalization, notably in li ght of Minister Chen Deming's September speech at 
the Xiamen fair that recalled China's plan to gra dually reduce the restrictions of the equity caps for 
foreign investment.   G/TRIMS/M/29 
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  54. Finally, the representative of the European Communities invited China to provide further 
information concerning the regulations for the implementation of the Law of the PRC on Sino-
Foreign Equity Joint Ventures, and in particul ar provisions pursuant to Articles 41 and 43.   
55. The representative of Japan
 welcomed the opportunity of participating in the TRM of China 
pursuant to its Accession protocol.  She requested clar ification with regard to the issue of performance 
requirement.  She indicated that Japan's ques tions were already circulated in document 
G/TRIMS/W/68 dated 5 October 2009.  China had co mmitted itself to comply fully with relevant 
provisions under the TRIMs Agreement as well as its A ccession Protocol, in particular, paragraph 7.3.  
Paragraph 7.3 stated, "China shall 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.  Moreover, China will not enforce provisions of contracts 
imposing such requirements".  In this regard, the representative of Japan inquired whether China 
could confirm that at present any means of approval of the right of importation or investment by national and sub-national authoriti es would not be conditioned on performance requirements of any 
kind, such as local content, offsets, the transfer  of technology, export performance or the conduct of 
research and development in China and if it was the c ase, she requested China to explain the reason.   
56. The representative of the United States
 welcomed China to the Eighth TRM, the second to 
last, and also put great value on this mechanism as  an opportunity to explore certain issues in the 
several areas that this review would deal with.  He  associated himself with the comments made by the 
European Communities and Japan  and indicated that  the United States had specific issues to raise in 
this context, as contained in document G/TRIMS/ W/67 dated 2 October 2009.  The issues related to 
investment in medical institutions and whether China had any plans to remove restrictions on 
approved partners for original e quipment manufacturers; whether there were any plans to lower the 
minimum registered capital requirements for establis hing holding companies;  and whether there were 
any plans to harmonize the rules for amending, dissolv ing or restructuring investments such as joint 
ventures.  Finally, he requested additional informa tion relating to the legal basis for denying mergers 
and acquisitions pursuant to the August 2006 Regula tions on Mergers and Acquisitions of Domestic 
Enterprises by Foreign Investors Decree adopt ed by the Ministry of Commerce.   
57. The representative of Canada  appreciated the opportunity to review China's commitments 
pursuant to paragraph 18 of the China's Protocol of Accession.  He noted the interest of other 
Members concerning the TRIMs Agreement and in  particular the written communications.  He 
indicated that Canada would continue mon itoring this discussion with interest.   
58. The representative of China  indicated that China had received the questions from the 
European Communities, Japan and the United States under the agenda item of transitional review.   
59. On the comments and questions concerning Chin a's commitments in respect of the TRIMs 
Agreement as found in paragraph 7. 3 of the Accession Protocol of China, more specifically those 
commitments on such performance requirements as local  content, offsets, the transfer of technology, 
export performance or the conduct of research and development, etc, the representative of China 
reiterated the statement that his de legation had made in the transitiona l reviews of previous years in 
the Committee.  He emphasized that China had faithfully honoured these commitments and that 
detailed information could be found in the minutes of the meetings of the Committee regarding the 
steps China took after accession to fulfil these comm itments, including for example the changes made 
to its legislation.  There was also much explana tion on the implementation of the revised legislation 
which since then had been consistent with the TRIMs Agreement.  In addition, China had also 
elaborated on the administrative and judicial review  mechanisms available to citizens and enterprises 
should they believe that they have problems in this  respect.  In China's view, these actions taken and 
means made available had already r esulted in a complete and comprehe nsive system that ensured that  G/TRIMS/M/29 
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  China's commitments in respect of the TRIMs Ag reement had been and would continue to be 
honoured.   
60. The representative of China noted that the Eu ropean Communities in its questions referred 
generally to industry reports on problems in respect of trade-related investment measures.  However, 
China had doubts as to whether the specific parties concerned had in reality pursued means available 
to them to address the problems, for example either administrative review or judicial review 
procedures, should they encounter such problems.   
61. One common specific question posed by the Eu ropean Communities and Japan was whether 
Articles 41 and 43 of the Regulations for the Implementation of the Law on Chinese-Foreign Equity 
Joint-Ventures were problematic in the light of China's obligations under the TRIMs Agreement.  The 
representative of China clarified that while China's commitment was that the approval for the right of 
importation or investment was not conditioned on pe rformance requirements including the transfer of 
technology, it nevertheless would not stop the part ies to a joint venture contract from negotiating 
provisions on technology transfers according to th eir own wish.  If a contract contained such 
provisions as a result of business negotiations, then Articles 41 and 43 would kick-in, which would 
protect better the interests of the parties to the c ontract.  It should be noted that there were no 
provisions in China's legislation indicating that a joint venture contract should contain technology 
transfer agreements, neither did any provisions in its  legislation imply that the approval of a contract 
should be conditioned on inclusion in the contr act of technology transfer arrangement.  The 
European Communities seemed worried that technology transfer could be taken as a de facto  
requirement in joint venture contracts.  If that was the case, the administrative and judicial reviews 
would be available for the affected parties to re quest to revisit those approval decisions conditioned 
upon technology transfer.   
62. With respect to the comments and questions posed by the European  Communities and the 
United States on the joint venture ownership limita tions, China had clear achievements in opening up 
the market and welcoming foreign investment opportun ities in the past thirty years.  Since its WTO 
accession in 2001, there had been irrefutable facts pr oving the firm resolve of the Chinese government 
to adhere continuously to the sound trade policy and investment liberalization.  President Hu Jintao 
reaffirmed this fundamental policy of opening up in his speech at the ceremony commemorating the 
60th anniversary of the founding of the People's Republic .  In this regard China particularly would like 
to draw Members' attention to the written info rmation it provided to the Committee as requested by 
Annex 1A of the Accession Protocol for the transitional review, circulated in document 
G/TRIMS/W/64.  This document indicated that China revised at the beginning of 2009 its Catalogue 
of Industries for Foreign Investment in Mid-West China  to open up 126 new specific industrial areas 
in Mid-West China to foreign investors, with i nvestment access conditions for another 154 specific 
industrial areas further improved.  It should particular ly be noted that this revision was in addition to 
the revision made only about one year ago in November 2007 to China's Catalogue of Industries for 
the Guidance of Foreign Investment  which also provided foreign investors greater access 
opportunities, and it was done at a time when the world was under the severe repercussions of the 
financial and economic crises and the pressure of trade and investment protectionism which was mounting elsewhere.   
63. The representative of China stated that in  the process of furthering the investment 
liberalization, China believed that the steps taken should be commensurate with  the development level 
of a nation, as well as the special situations of di fferent sectors.  This actually would provide an 
answer to the United States' questions regard ing the Chinese medical sector and on minimum 
registered capital requirements.  The medical se ctor would generally remain in the "restricted" 
category.  One reason would be that this sector had been undergoing major reform in China.  
However, China's policy direction to further the liberalization was always clear and firm, and the 
health sector would be no exception.  As a matter of fact, studies on relaxing the foreign investment G/TRIMS/M/29 
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  cap in this sector were initiated, and as a first step, according to the newly revised Catalogue of 
Industries for Foreign Investment in Mid-West China , foreign investment in the medical sector in 
seven provinces in the Mid-West China would now be in the "encouraged" category.   
64. On the questions of the European Communities concerning the Steel Industry Development 
Policy , China's clarifications and replies made in prev ious reviews had been fairly comprehensive and 
would be still valid.  As a supplement to these res ponses, China could provide additional information.  
Firstly, on the provision that "foreign investors would in principle not hold a controlling stake when investing in the Chinese steel industry", China was of  the view, as just noted, that the steps taken for 
liberalization should be commensurate with the de velopment level of a nation, an economy and a 
sector.   
65. With respect to the requirement that invest ors should have a minimum self-owned capital of 
at least 40 per cent of the total capital needed, th is was due to the background that the production 
capacity of the industry in China had already been in surplus.  The European Communities indicated 
that this limitation was counterproductive and would hinder a sound development of the steel 
industry.  However in China's view, if investment continued to flow into the sector for expansion of 
production capacity which already had been in surplus,  the industry would definitely not benefit and 
would not have a sound development.   This 40 per cent self capital requirement should be one of the 
tests to establish that a company could meet Ar ticle 23 conditions.  Others, for example, those 
concerning technology development level, might be found in the Catalogue for the Guidance of 
Industrial Structure Adjustment and Guidance on Major Areas for Development of Hi-Tech 
Industrialization with Priority .  As to whether they were identical to foreign and domestic investors, 
the representative of China indicated that he was not informed by his competent authority of any 
additional requirements or tests applicable only to foreign investors.   
66. Regarding questions on Article 17 of the Policy , the representative of China said that while 
sticking to openness in trade and investment, China also believed that development of China's own 
equipments and technologies should be important.  These two points should not be conflicting, but 
rather complementary or mutually reinforcing in the development of a nation's economy.  There had 
always been things that others w ould never sell, or a country had to pay dearly for simply because that 
country was not able to produce it.  That was why developing Members in the Organization, including 
China, had always stressed the significance of su ch issues as technology transfer.  Of course, China 
was fully aware of its obligations in the Organization and would ensure that measures in this regard, if 
undertaken, would be implemented c onsistently with the requirements of the TRIMs Agreement.   
67. On the question of the United States rega rding the OEMs, the competent authorities 
responsible for foreign investment policies were not ab le to identify the particular issue.  China would 
therefore be grateful if the United States could pr ovide the specific policy document it referred to, for 
example a decree or an announcement, etc.   
68. On the question concerning rules for amending, dissolving or restructuring investments such 
as joint ventures, China actually had difficulties in understanding what specific problems the 
United States had.  But for general information purposes, China would like to inform the Members 
that a specific rule in this respect, that is, the Measures for Liquidation of Foreign-Invested 
Enterprises issued in 1996 was abolished in January 200 8.  Dissolving and liquidation of enterprises 
with foreign investment would now generally follow the provisions of the Company Law  and also, if 
applicable, certain specific provisions in laws a nd regulations concerning foreign investment.   
69.
 On the question concerning Regulations on Mergers and Ac quisitions of Domestic 
Enterprises by Foreign Investors  issued in August 2006 by MOFCOM, the representative of China 
informed that this particular rule had been  revised in 2009 to become in line with the Anti-Monopoly  G/TRIMS/M/29 
 Page 11 
 
 
  Law.  When an application for mergers and acquisitions  would be declined, an explanation of reasons 
and also the legal basis for the denial would normally be provided.   
70. Lastly, on the request for written answers for th e questions raised under this agenda item, the 
representative of China stated that the position of the Chinese delegation on this issue has been clear 
and he would not repeat it.  However, to facilitate the Secretariat's preparation of the meeting minutes, 
his delegation would send the statement just made to  the Secretariat after the meeting, through which 
it may be available to Members.   
71. The representative of Japan  was grateful for the detailed explanation provided by China and 
welcomed the clear and strong statement that China had faithfully honoured its commitments 
under paragraph 7.3 of its Accession Protocol.  She also  agreed with China's views that this issue was 
not new, and had been taken up in the previous m eetings.  However, the reason why Japan felt obliged 
to take up this issue again was that it was not pr ovided with a written document by China assuring that 
China would indeed honour those commitments.  In this context, she welcomed the last part of 
China's response that a copy of its statement at the meeting would be provided to Members.  She 
looked forward to having a close look at the document.   
72. The representative of the European Communities  thanked China for the responses and 
indicated that it was looking forward to seeing the written version of the statement made in order to analyze it and see if it actually addressed all the ques tions posed.  He indicated that a reference had 
been made by China regarding the doubt it had if an industry had actually pursued the judicial and administrative review procedures set.  The questi on posed by the European  Communities was actually 
aimed at obtaining an assessment of how often the va rious review mechanisms that could be available 
to industries have resulted in locally applied lo cal content requirements to be rectified.   
73. The representative of the United States
 thanked China for its responses and indicated that the 
United States would carefully review the info rmation China provided at the meeting.   
74. The representative of China  took the floor to comment on the question posed by the 
representative of the European Communities.  He indi cated that the Department of Treaty and Law in 
MOFCOM was responsible for certain administrative reviews of decisions which would relate to a 
certain degree to the TRIMs Agreement.  He indi cated that while to his knowledge there did not seem 
to be complete statistics available in this regard , it also seemed to him that the Department did not 
receive many cases requesting review.   
75. 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/65.  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.   
76. 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.   
G. OTHER BUSINESS  
77. No Member raised any issues under this agenda item.   G/TRIMS/M/29 
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  H. D
ATE OF THE NEXT MEETING  
78. It was agreed that the next regular meeting of the Committee be held on Friday, 
1 October 2010.  The airgram convening the meetin g would be circulated to all Members on Monday, 
20 September 2010.  The last date for inscription of  items on the agenda of the meeting would be 
Thursday, 16 September 2010, by close of business.   
I. ANNUAL REPORT (2009) 
79. The Chairperson  said 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/66.  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.   
80. The Committee adopted  the Annual Report (2009).1  
                                                      
1 G/L/900.    G/TRIMS/M/29 
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  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 cons ultation requirements contained in Article 
XVIII, paragraphs 14 to 19, and the WTO Secr etariat 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 Note, th e phrase "free to deviate temporarily from 
the provisions of Article 2" that is contained in Article 4 of the TRIMs Agreement shall be 
understood to refer, in the case of these countri es, 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/29 
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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. 
 
  
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