WORLD TRADE
ORGANIZATIONWT/WGTI/W/104
12 June 2001
(01-2913)
Working Group on the Relationship
between Trade and InvestmentOriginal:  English
COMMUNICATION FROM JAPAN
The following communication, dated 11 June 2001, has been received from the Permanent
Mission of Japan.
_______________
INVESTMENT RULES FOR DEVELOPING POLICIES
I. INTRODUCTION
1. It has been pointed out in the Working Group (WG) meetings to date that Foreign Direct
Investment (FDI) has a positive effect on development.1 The economic benefits that FDI can bring
about for the host country can be specified, in particular, capital transfer, transfer of technology andmanagement know-how, increased employment, the fostering of a skilled labour force, and the access
to international production networks and access to foreign markets by the industries of host countries.
These economic benefits play a very large and important role in modernisation of the national
economy and in the acceleration of economic growth in the host countries.
2. In order that FDI can effectively contribute to the economic development of the host country,
it is necessary to consider two separate aspects.
3. First is that FDI itself should be enhanced. The primary decision-making factors for FDI
include market scale, market growth potential, a stable macroeconomic environment, political
stability and labour quality and costs in a host country. (Refer to the Communication from UN
Conference on Trade and Development.
2 Further important conditions in addition to the above-
mentioned include the predictability of various rules such as legislation concerning investment, the
tax system and conditions governing business activities. No matter to what degree there is anappealing market scale and latent growth potential, in cases where there is an unpredictable risk of
change, it would be impossible for investors to predict stable management after investment, and
therefore investors actively seek to avoid active investment activities in such cases.
4. Second is how to effectively link the recipien t of investment to domestic economic growth. In
other words, in this process, the positioning of di rect inward investment in the domestic development
policies of the host country is an important factor. In order that through investment activities,
production, the expansion of employment, the expansion of procurement, a relative effect on related
industries, and a ripple effect to the regional economy can all be ultimately linked to economic growth
in host countries, balanced investment rules and development policies are required according to the
developmental stage of each host country.
                                                     
1 WT/WGTI/W/65, WT/WGTI/W/38.
2 Communication from UNCTAD, WT/WGTI/W/77.WT/WGTI/W/104
Page 2
5. From this viewpoint the following modalities for investment rules and development policies
should be considered. One of the main aims of International Investment Agreements is to establish an
investment environment that basically protects and promotes FDI, and heightens stability,
predictability and transparency. In order to maximise the promotional effect of FDI through
International Investment Agreements, what is absolutely required to the greatest extent possible is
discipline in agreements and investor predictability should be sought. Furthermore, InternationalInvestment Agreements that concern developing coun tries are concluded with the expectation that the
resulting investment will contribute to economic gr owth in the investment host country. Accordingly,
there are many cases in which the preambles of Agreements clearly state the promotion of economic
and social development as their most important objectives.
6. However, in order for developing countries to achieve economic development, it is important
for the country concerned to implement its own a ppropriate development policies. Accordingly, for
the investment host country, in the conclusion of an  International Investment Agreement it is of great
interest to ensure that a structure is put in place  to ensure sufficient flexibility in the adoption of
necessary development policies. Of course, as the EU has pointed out
3, it is important to avoid the risk
of pushing the notion of the extent to which “flexibility” is applicable too far, as this could cause
confusion with the “right to discriminate.”
7. From the above perspective, when we consider overall the current existing International
Investment Agreements, investment-related agreem ents and the number of WTO Agreements, we can
see evidence of efforts that have been made to achieve balance between discipline and flexibility, as
evidenced by such agreements as the General Agreement on Trade in Services (GATS).
8. In the case of formulation of a comprehensive agreement on investment in the WTO system,
the issue of balance between discipline and flexibility is also of great importance. In particular, thereis a great diversity of developmental stages among WTO members, and many differences in a variety
of aspects such as economic conditions, legal and administrative systems, infrastructure, regulations,
and technical standards. Of course, there are also differences among countries concerning the priority
that is placed on development policies. Accordingly, the modalities for ideal rules could, by ensuring
that the circumstances in the host country are adequately reflected in an appropriate balance betweenthe rights and obligations of both the investor and the investment host country through an agreement,
would thereby maximising the benefits to inve stor and investment host country. From this
perspective, appropriate “flexibility” should be pursued that allows each Party to consider the
developmental stages and development policies of each country.
9. The issue of “flexibility” in International Investment Agreements is a very important one that
has been taken up for discussion on many occasions in the Working Group meetings. In the process of
building up some common understanding regarding investment rules, this issue should be deliberated
adequately. In this regard, the submissions from India
4 and the EU5 in 2000, and the UNCTAD
documents pertaining to International Investment Agreements submitted in 19996, serve as great
resource materials for reference in discussions.
10. With reference to the various discussions and papers that have been contributed to the
Working Group meeting process thus far, the following is an attempt to list with examples, thevarious points into which study should be deepened, concerning “flexibility” in International
Investment Agreements. This paper will also analyse what response should be made to existing
investment and investment-related agreements and the various WTO Agreements. It is hoped that this
paper will serve as a future reference for discussions.
                                                     
3 WT/WGTI/W/89.
4 WT/WGTI/W/86.
5 WT/WGTI/W/89.
6 WT/WGTI/W/77.WT/WGTI/W/104
Page 3
11. This submission is intended not to bind the stance of Japan but to illustrate some issues for
further discussions in this Working Group.  There could be other important elements to be deliberated
regarding flexibility than those raised in this paper, and we have no intention to exclude the discussion
on these points.
12. From the standpoint that an International Investment Agreement should be designed in a
compatible manner with development policies of developing countries concerned, we would like toshow some options for consideration.
II. CONSIDERATION GIVEN TO DEVELOPMENT POLICIES IN EXISTING
AGREEMENTS
13. There is much consideration being given to development policies in the existing agreements,
or rather the methods of providing flexibility. The first method of consideration given to development
policies is to reflect the overall spirit of an agreement. For example, in many agreements, reference of
consideration to development policies is made in the preamble or in the objectives. A second methodis to consider development policies in individual provisions. This method consists of two main
concepts. These are to either a) through the establishment of exceptions or permission of reservations
to alleviate or exempt entirely developing country obligations; or b) through the provision of grace
periods for developing countries, provide ample time for implementation. A third method is to impose
discipline, and at the same time to promote support to enhance capacities to realise this. It is of courseself-evident that flexibility is not necessary provided by any of these means exclusively, but rather by
a variety of combinations of their use.
1. Preamble and Objectives
14. As is stated in the UNCTAD paper
7, the Preamble or Objectives of an Agreement provide an
interpretation of the Agreement, and encapsulate in a few paragraphs, the overall spirit of theAgreement. Accordingly, the concept for the devel opment elements of an agreement as described in
the preamble or objectives, can offer a certain orientation for the overall objectives and interpretation
of the agreement.
15. In actual fact, examples of this kind can be  found in the WTO Agreements, such as GATS
and the Agreement of Trade-Related Investment Measures (TRIMs Agreement), that include themany developing countries that are signatories to such agreements. In such agreements due
consideration is given to development in the preamble, and the objective of economic development is
stated. In this way, the interpretations of the provis ions in the main text of the agreement become the
ones given due consideration in their developmental aspects.
16. There are two concrete types of description. One of these is the general description of
recognizing and taking into account the difficulties and special needs that are directly facing
developing countries or/especially least developed countries. Another type of description is that seen
in the preamble to the TRIPS Agreements, which is in  a style that refers to flexible domestic legal
implementation. (ANNEX, (A)).
                                                     
7 WT/WGTI/W/77.WT/WGTI/W/104
Page 4
2. Definition
17. The definition of investment is an important element that stipulates the scope of factors
covered under the discipline of investment rules. The paper prepared by the secretariat8 summarises
the discussions that have been held in the Working Group concerning the definition. In addition,
Japan has also conducted its own analysis of the definition in the existing International Investment
Agreements.9
18. The definition of investment in the existing agreements is of the type laid out below:
19. Firstly, there is the definition that can be found in many of the agreements concluded in recent
years. This definition incorporates every kind of asse t related to corporate activities, bringing into the
broad scope of the definition portfolios and the acquisition of intellectual property rights.
20. Secondly, there is a pattern in which investment is broadly defined with specified areas
excluded from the definition. Examples of this approach can be seen in the North American Free
Trade Agreement (NAFTA), which form a source of reference when considering the scope ofinvestment rules narrowed down into a specific framework.
21. There is a third, narrow definition that limited to FDI and excludes portfolio investment and
real estate investment. Enterprise-based standards, taking into account the establishment of a
permanent relationship and the effect to business management. Although the Balance of Payments
Manual of the International Monetary Fund (IMF) and the benchmarks of the Organisation forEconomic Co-operation and Development (OECD) (ANNEX (B)) are not agreements in themselves,
they illustrate standards and definitions for such FDI.
22. In GATS, a stipulation is adopted concerning the provision of services through a commercial
presence in the territory of any other Member (Art icle I.2(c)). This covers FDI in service areas.
(ANNEX (C)).
23. When considering a “definition” in a possible multilateral investment rules, building on the
existing agreements, a definition could be selected from three categories:
(i) The first category is the adoption of enterprise-based standards such as those
definitions laid out by the IMF and the OECD Code of Liberalisation ofCapital Movements, which limit the scope of investment from the outset.
(ii) The second category is to first define investment under a broad scope, after
which by either broadly acknowledging short-term capital movements
regulation, or by excluding short-term speculative capital flows, can basically
give each county’s regulations some room for manoeuvre.
(iii) The third category offers a compromise between the first two categories, by
responding to the elements of the agreement and changing the application
scope of a definition and the method of application. For example, a broad
definition is used concerning protection articles, which while on the one hand
broadly protecting investments, narrowly define the scope of national
treatment of pre-establishment, which provoke strong concern among
developing countries.
                                                     
8 WT/WGTI/W/76.
9 WT/WGTI/W/92.WT/WGTI/W/104
Page 5
24. It is of the greatest importance that all Parties adopt a common definition of investment,
otherwise investors may lose their predictability. A ccordingly, it is necessary to either ensure that
each country does not use its own discretion interpretation of a definition, and to see to it that in
discussions of a definition, there is an adequate balance with each country’s development policies.
3. Transparency
25. As Japan has already pointed out in the previous paper10, there is the need for internal systems
to be revised in response to the policy needs of each country with globalisation of economy and
development of Information Technology.  From the standpoint of investment expansion, equal
importance should be given to the need for transparen cy in these systems, and also for transparency in
their formulation and the revision processes. Through such transparency, in addition to the
predictability of such systems being enhanced, it would be possible to avoid discretionary or
unnecessary systemic revisions.
26. The obligation to ensure transparency in the existing WTO Agreements appears on several
levels, such as the publication of regulations (GATT Article X), the establishment of enquiry points
(GATS Article III Paragraph 4), notification to the WTO (TRIMs Article 6), the ensuring of
transparency of licensing procedures (GATS Article VI Paragraph 3), and prior public notification
(TBTs Article 2.9). The level of obligations to ensure transparency are determined in response to the
coverage of measures and the actual obligations imposed on Member countries by each agreement.
27. In addition, there is an example remaining in the transparency provision of an agreement the
basis to allow developing countries a grace period with due consideration to their capacities in
implementation (GATS Article III Paragraph 4). (ANNEX (4))
4. Non-discriminatory (National Treatment)
28. One of the most important principles of the WTO agreements is the principle of National
Treatment, whereby investors are entitled to receive treatment in the host country equal and fair to the
treatment received by companies of that country. It is important that this principle be adequately
reflected in a possible investment agreement. However in a number of countries, in particular
developing countries, due to a variety of devel opmental stages, and a variety of economic and social
conditions, it is necessary to establish individual development policies that provide special treatmentto domestic companies and industries. Therefore it is imperative for developing countries to ensure a
balance between national treatment principles and their development policies.
29. As a means to ensure such flexibility, there are two main methods that can be employed. The
top-down approach (the negative list method) and the bottom-up approach (positive list method).
30. The top-down approach is one that compiles a negative list with exceptions to liberalisation,
while in principle it is stipulated that the Member country provides national treatment for investors of
other Member. Examples such as this can be found in NAFTA.
31. On the other hand, the bottom-up approach adopts the compilation of a positive list of sectors
to be liberalised. For example, this approach has been adopted in GATS.
11 For each country,
especially the developing countries, lists are only made for those sectors in which liberalisation is
possible, and those sectors which represent exceptions to liberalisation, or for which a grace period is
necessary before liberalisation can be achieved, do not have to be included in a list. Therefore it couldbe said that this is an approach to give due consideration to the development policies of developing
countries with regard to flexibility. (ANNEX (5)).
                                                     
10 WT/WGTI/W/87.
11 WT/WGTI/W/96.WT/WGTI/W/104
Page 6
32. In whichever of the above-mentioned approaches are used, by adopting certain reservations to
the principle of non-discrimination, it is possible to progressively implement various obligations in
discipline, while maintaining a balance with development policies.
5. Performance Requirement
33. With the intention of heightening the economic effect of investment in host countries, there
are cases where performance requirements are imposed on investors. There are currently variousdebates over the economic effect of performance requirements.
12,13 Already through the TRIMs
Agreement, performance requirements have been regulated as being in contravention of Articles III
and XI of GATT, and one of the important issues for investment rules is how and in what way
performance requirements should be treated. No matter how performance requirements are handled in
a possible investment agreement, it is a fact that th ey have endowed a good deal of flexibility in the
existing investment agreements.
34. There are three types of disciplines on performance requirements that can be observed in the
existing rules. (a) An approach that does not make clear the stipulations regarding performance
requirements; (b) An approach that regulates a certain scope of performance requirements; (c) An
approach that partially accepts incentive-related performance requirements, but regulates a broad
scope of performance requirements. The TRIMs Agreement itself aims for performance requirement
regulation.
(a) An approach that does not make clear PRs-related stipulations
35. Early BITs and the ASEAN Agreement for the Promotion and Protection of Investments do
not clearly stipulate performance requirements.
(b) An approach that regulates a certain scope of performance requirements
36. In the TRIMs Agreement, PRs that are subject to regulation are illustrated as local content
requirements, trade-balancing requirements, foreign exchange restrictions, and export restrictions.
(ANNEX (6))  In addition, the GATS has relations to PRs, for its provisions on the market access
include some measures that correspond performance requirements in International Investment
Agreements. (ANNEX (7)).
(c) An Approach that partially accepts incentive-related performance requirements, but regulates
a broad scope of performance requirements
37. Although NAFTA prohibits a broad scope of perf ormance requirements illustrating 7 PRs, 4
PRs out of them are allowed when they are incentive-related. (ANNEX (8)).
6. Dispute Settlement
38. It is vital that, in the International Investment Agreements, solution procedures are clearly
stipulated in the case of dispute in relation to the implementation of obligations of the agreements
among contracting Parties. In particular, if any dispute were to be dealt with by only the states/parties
concerned, there is a risk that such a settlement could reflect the individual circumstances and
political and economic situation of those states/parties. It is therefore important to have fair dispute
settlement rules, with a high degree of transparency that can be seen by a large number of neutral
states within the WTO framework.
                                                     
12 WT/WGTI/W/82.
13 "Foreign Direct Investment and Development", Theodore H. Moran, Institute for International
Economics, December 1998.WT/WGTI/W/104
Page 7
39. Articles relating to dispute settlement in the existing International Investment Agreements can
be divided into two categories, regarding the concept of their standing (eligibility of party). First is an
approach that recognises conflict between investors and states, and places great importance on the
protection of the rights of the investor. A second approach is a point of view that limits dispute
settlement to that between states only. The general position adopted in the WTO Agreements is the
latter case, and the GATS also only stipulates rules for inter-state dispute settlement. At the sametime, NAFTA incorporates the former approach, covering both investor-state and inter-state disputes.
40. The administering bodies of WTO Agreements are state parties, and even if an investment
agreement were to be set out, it would be inappropriate to recognise private individuals as having a
standing in dispute settlement. Otherwise, there would be a high possibility of a sharp increase in
lawsuits being filed by investors, creating a larg e burden for Member governments.From the point
of view of flexibility, stipulations are made to pay special consideration to least developed countries
in dispute settlement procedures in WTO Agreements. (ANNEX (9)).
41. This paper has thus far set out a case for flexib ility aimed at reducing obligations in rules and
others, in (1) the preamble and objectives, and in subs tantive provisions from (2) to (6). The following
points (7) and (8) lay out a concept that provide flexibility in taking into account developing countries
concerning the implementation of rules.
7. Flexible Treatment of Developing Countri es Obligations in Implementation, etc.
42. From the point of view of finding a balance in disciplinary and developmental aspects, it is
important to find a way to realise the implementation, etc., of the agreements. In the implementation
of the existing WTO rules, flexibility is given to the developing countries’ obligations, of which two
concrete means can be seen. First is the establishment of a grace period, which allows developing
countries to improve their capacity. Second are examples in which there is flexibility in the specialinitial treatment of states concluding agreements.
43. Examples of the former grace period measure, can be found in Article 5, Paragraph 2 of the
TRIMs Agreement, and Article 65, Paragraph 2 and Article 66, Paragraph 1 of the TRIPS
Agreements. (ANNEX (10))  In the TRIMs Agreement, developing countries are given grace periods
of five years, and least developed countries a period of seven years, and the TRIPS Agreement doeslikewise, stipulating periods of five and 11 years respectively. Cases of the latter example include
GATS (Article 4), and the TBT Agreement (Article 12.8). (ANNEX (11))  In addition, stipulations are
made that take into account the economic and developmental situation of developing countries. Such
flexibility in implementation, etc., in combinati on with flexibility in the rules themselves, are
important elements when developing countries respond to international rules and rationalise themwith their own development policies.
8. Technical Assistance
44. There are no doubts that FDI has a positive effect on economic growth and development in
host countries. This kind of development can further be expected to invite further investment, in a
positive growth cycle. It is for this reason that it is important to promote investment liberalisation,
while bearing in mind the need to strike a balance with the development policies of host countries.
However, in developing countries, resources such as human, systems, legislation, etc., are insufficientfor implementation, and there are cases where the introduction of rules cannot be promptly dealt with.
In such cases, to encourage obligations, it is important for developed countries to provide appropriate
assistance based on its past experiences without lowering the standards of the rules. In the existing
WTO Agreements, GATS (Article 25) and TRIPS (Article 66.2 and Article 67) make provisions for
technical assistance to ensure flexibility in developing countries responses to such situations.(ANNEX (12)).WT/WGTI/W/104
Page 8
9. Activities of Investors in the Host Countries
45. The importance of striking a balance between investment rules and development policies has
already been stated, but it is actually the multi-natio nal enterprises (MNEs) that work as the investors
and undertake the economic activities in this balance. It is imperative that both the rights of investors
and their obligations should be considered.
46. Accordingly, one approach could be to consider articles concerning investor activities as a
factor for flexibility in the investment rules.
47. One option would be to incorporate as a reference any guidelines for investors in the
investment rules. Although, as was pointed out in an EU paper14, international agreements are unable
to directly impose obligations on companies, and it is appropriate to treat it as firmly non-binding.
III. CONCLUSION AND FUTURE POINTS FOR DISCUSSION
48. As we have seen, in the existing Internationa l Investment Agreements and investment-related
agreements, and in the existing WTO Agreements, pr ovisions have already been formulated that take
into consideration developmental aspects. This trend is particularly noticeable in the WTO
Agreements. When deliberating a possible Investme nt Agreement in the future, while taking into
account articles of the existing agreements, it should be also possible to formulate flexible rules in a
manner that respects development policies.
49. The following lists the possible choices regarding what kind of flexibility should be pursued
in the compilation of rules and the actual provis ions of the International Investment Agreements.
While several points of view can be reflected in a flexible approach, further discussion is necessary.
The list laid out below enumerates a number of elements, including those that have not been discussed
in this paper. These elements are, of course, also very important and cannot be ignored.
50. (Modalities for compilation of rules and actual provisions)
• Preamble and Objectives
Confirmation the importance of domestic development policies, flexibility of discipline, and
technical assistance, etc.
• Composition of Schedules
In addition to Most Favoured Nation exemptions(MFN), impose limits and conditions on
market access (MA) and national treatment (NT) (in both negative and positive lists)
Exceptions concerning pledges in specified areas
• Exemption or lowering of obligations
Grace periods, progressive implementation and relaxation of commitments
Making exceptions for measures that deal with emergency situations
• Permissibility of performance requirements necessary for development
• Technical and financial assistance
                                                     
14 WT/WGTI/W/81.WT/WGTI/W/104
Page 9
• Consideration of developmental aspects in dispute settlement procedures
• Others
Competition policies
Measures by governments of developed countries to promote increased FDI in developing
countries and other measures.WT/WGTI/W/104
Page 10
ANNEX
(1)
Agreement Establishing The World Trade Organization (Preamble)
Recognizing further that there is need for posi tive efforts designed to ensure that developing
countries, and especially the least developed among them, secure a share in the growth in
international trade commensurate with the needs of their economic development,
GATS (Preamble)
Wishing to establish a multilateral framework of principles and rules for trade in services with
a view to the expansion of such trade under conditions of transparency and progressive
liberalisation and as a means of promoting the economic growth of all trading partners and thedevelopment of developing countries;
Desiring to facilitate the increasing participation of developing countries in trade in services
and the expansion of their service exports including, inter alia, through the strengthening of
their domestic services capacity and its efficiency and competitiveness;Taking particular account of the serious difficulty of the least-developed countries in view of
their special economic situation and their development, trade and financial needs;
Agreement on TRIMs (Preamble)
Desiring to promote the expansion and progressive liberalization of world trade and to
facilitate investment across international frontiers so as to increase the economic growth of all
trading partners, particularly developing country Members, while ensuring free competition;
Taking into account the particular trade, development and financial needs of developing
country Members, particularly those of the least-developed country Members;
Agreement on TRIPS (Preamble)
Recognizing also the special needs of the l east-developed country Members in respect of
maximum flexibility in the domestic implementation of laws and regulations in order to
enable them to create a sound and viable technological base;
(2)
OECD Code of Liberalisation of Capital Movements
Direct investment: investment for the purpose of establishing lasting economic relations with
an undertaking such as, in particular, investments which give the possibility of exercising an
effective influence on the management thereof:
1. Creation or extension of a wholly-owned enterprise, subsidiary or branch, acquisition of
full ownership of an existing enterprise;
2. Participation in a new or existing enterprise;
3. A loan of five years or longer
(3)
GATS (Article 28(d))
“Commercial presence” means any type of business or professional establishment, includingthrough:
i) the constitution, acquisition or maintenance of a juridical person,
orii) the creation or maintenance of a branch or  representative office, within the territory
of a Member for the purpose of supplying a service.
(4)WT/WGTI/W/104
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GATS (Article 3)
1. Each Member shall publish promptly and, except in emergency situations, at the latest by
the time of their entry into force, all relevant measures of general application which pertain to
or affect the operation of this Agreement. Inte rnational agreements pertaining to or affecting
trade in services to which a Member is a signatory shall also be published.
2. Where publication as referred to in paragraph 1 is not practicable, such information shall be
made otherwise publicly available.
3. Each Member shall promptly and at least a nnually inform the Council for Trade in Services
of the introduction of any new, or any changes to existing, laws, regulations or administrative
guidelines which significantly affect trade in  services covered by its specific commitments
under this Agreement.
4. Each Member shall respond promptly to all requests by any other Member for specific
information on any of its measures of general application or international agreements within
the meaning of paragraph 1. Each Member shall also establish one or more enquiry points toprovide specific information to other Members, upon request, on all such matters as well as
those subject to the notification requirement in paragraph 3. Such enquiry points shall be
established within two years from the date of entry into force of the Agreement Establishing
the WTO (referred to in this Agreement as the "WTO Agreement"). Appropriate flexibility
with respect to the time-limit within which such enquiry points are to be established may beagreed upon for individual developing count ry Members. Enquiry points need not be
depositories of laws and regulations.
(5)
GATS (Article 17.1)
In the sectors inscribed in its Schedule, and subject to any conditions and qualifications set out
therein, each Member shall accord to services and service suppliers of any other Member, in
respect of all measures affecting the supply of services, treatment no less favourable than that
it accords to its own like services and service suppliers.
(6)
Agreement on TRIMs
Article 1: CoverageThis Agreement applies to investment measures related to trade in goods only (referred to in
this Agreement as "TRIMs").
(7)
GATS  (Article 16)
2. In sectors where market-access commitments are undertaken, the measures which a
Member shall not maintain or adopt either on the basis of a regional subdivision or on the
basis of its entire territory, unless otherwise specified in its Schedule, are defined as:
(d) limitations on the total number of natural persons that may be employed in a particular
service sector or that a service supplier may employ and who are necessary for, and
directly related to, the supply of a specific service in the form of numerical quotas or the
requirement of an economic needs test;WT/WGTI/W/104
Page 12
(8) NAFTA
Article 1106: Performance Requirements
1. No Party may impose or enforce any of the following requirements, or enforce any
commitment or undertaking, in connection with the establishment, acquisition, expansion,
management, conduct or operation of an investme nt of an investor of a Party or of a non-
Party in its territory:
(a) to export a given level or percentage of goods or services;
(b) to achieve a given level or percentage of domestic content;
(c) to purchase, use or accord a preference to goods produced or services provided in its
territory, or to purchase goods or services from persons in its territory;
(d) to relate in any way the volume or value of imports to the volume or value of exports or to
the amount of foreign exchange inflows associated with such investment;
(e) to restrict sales of goods or services in its territory that such investment produces or
provides by relating such sales in any way to the volume or value of its exports or foreign
exchange earnings;
(f) to transfer technology, a production process or other proprietary knowledge to a person in
its territory, except when the requirement is imposed or the commitment or undertaking is
enforced by a court, administrative tribunal or competition authority to remedy an allegedviolation of competition laws or to act in a manner not inconsistent with other provisions of
this Agreement; or
(g) to act as the exclusive supplier of the goods it produces or services it provides to a specific
region or world market.
2. A measure that requires an investment to use a technology to meet generally
applicable health, safety or environmental requirements shall not be construed to be
inconsistent with paragraph 1(f). For greater certainty, Articles 1102 and 1103 apply to the
measure.
3. No Party may condition the receipt or continued receipt of an advantage, in
connection with an investment in its territory of an investor of a Party or of a non-Party, oncompliance with any of the following requirements:
(a) to achieve a given level or percentage of domestic content;
(b) to purchase, use or accord a preference to goods produced in its territory, or to purchase
goods from producers in its territory;
(c) to relate in any way the volume or value of imports to the volume or value of exports or to
the amount of foreign exchange inflows associated with such investment; or
(d) to restrict sales of goods or services in its territory that such investment produces or
provides by relating such sales in any way to the volume or value of its exports or foreign
exchange earnings.
4. Nothing in paragraph 3 shall be construed to prevent a Party from conditioning the
receipt or continued receipt of an advantage, in connection with an investment in its
territory of an investor of a Party or of a non-Party, on compliance with a requirement tolocate production, provide a service, train or employ workers, construct or expand
particular facilities, or carry out research and development, in its territory.
5. Paragraphs 1 and 3 do not apply to any requirement other than the requirements set
out in those paragraphs.
6. Provided that such measures are not applied in an arbitrary or unjustifiable manner,
or do not constitute a disguised restriction on international trade or investment, nothing in
paragraph 1(b) or (c) or 3(a) or (b) shall be construed to prevent any Party from adopting or
maintaining measures, including environmental measures:
(a) necessary to secure compliance with laws and regulations that are not inconsistent with the
provisions of this Agreement;
(b) necessary to protect human, animal or plant life or health; or
(c) necessary for the conservation of living or non-living exhaustible natural resources.WT/WGTI/W/104
Page 13
(9)
DSU (Article 24.1)
At all stages of the determination of the causes of a dispute and of dispute settlementprocedures involving a least-developed country Member, particular consideration shall be
given to the special situation of least-developed country Members. In this regard, Members
shall exercise due restraint in raising matters under these procedures involving a least-developed country Member. If nullification or impairment is found to result from a measure
taken by a least-developed country Member, complaining parties shall exercise due restraint in
asking for compensation or seeking authorization to suspend the application of concessions or
other obligations pursuant to these procedures.
(10)
Agreement on TRIMs (Article 5.2,3)
2. Each Member shall eliminate all TRIMs which are notified under paragraph 1 within two
years of the date of entry into force of the WTO Agreement in the case of a developed
country Member, within five years in the case of a developing country Member, and
within seven years in the case of a least-developed country Member.
3. On request, the Council for Trade in Goods  may extend the transition period for the
elimination of TRIMs notified under paragraph 1 for a developing country Member,including a least-developed country Member, which demonstrates particular difficulties
in implementing the provisions of this Agr eement. In considering such a request, the
Council for Trade in Goods shall take into account the individual development, financial
and trade needs of the Member in question.
 Agreement on TRIPS (Article 65.2)
    A developing country Member is entitled to delay for a further period of four years the
date of application, as defined in paragraph 1,  of the provisions of this Agreement other
than Articles 3, 4 and 5.
(11)
GATS (Article 4)
1. The increasing participation of developing country Members in world trade shall be
facilitated through negotiated specific commitments, by different Members pursuant
to Parts III and IV of this Agreement,
(a) the strengthening of their domestic services capacity and its efficiency and
competitiveness, inter alia through access to technology on a commercial basis;
(b) the improvement of their access to distribution channels and information
networks;
and
(c) the liberalization of market access in sectors and modes of supply of export
interest to them.
2. Developed country Members, and to the extent possible other Members, shall
establish contact points within two years from the date of entry into force of the WTO
Agreement to facilitate the access of developing country Members' service suppliers
to information, related to their respective markets,
(a) commercial and technical aspects of the supply of services;(b) registration, recognition and obtaining of professional qualifications; and
(c) the availability of services technology.
3. Special priority shall be given to the least-developed country Members in the
implementation of paragraphs 1 and 2. Particular account shall be taken of the serious
difficulty of the least-developed countries in accepting negotiated specificcommitments in view of their special econom ic situation and their development, trade
and financial needs.WT/WGTI/W/104
Page 14
Article 19.2
The process of liberalization shall take place with due respect for national policy
objectives and the level of development of individual Members, both overall and in
individual sectors. There shall be appropriate flexibility for individual developing
country Members for opening fewer sectors, liberalizing fewer types of transactions,progressively extending market access in line with their development situation and,
when making access to their markets available to foreign service suppliers, attaching to
such access conditions aimed at achieving the objectives referred to in Article IV.
      Agreement on Technical Barriers to Trade (Article 12.8)
Accordingly, with a vi ew to ensuring that developing country Members are able to comply
with this Agreement, the Committee on Technical Barriers to Trade provided for in Article 13(referred to in this Agreement as the "Com mittee") is enabled to grant, upon request,
specified, time-limited exceptions in whole or in part from obligations under this Agreement.
When considering such requests the Committee shall take into account the special problems,
in the field of preparation and application of technical regulations, standards and conformity
assessment procedures, and the special development and trade needs of the developingcountry Member, as well as its stage of te chnological development, which may hinder its
ability to discharge fully its obligations under this Agreement. The Committee shall, in
particular, take into account the special problems of the least-developed country Members.
Agreement on The Application of Sanitary and Photosanitary Measures (Article 10.3) 
With a view to ensuring that developing country Members are able to comply with the
provisions of this Agreement, the Committee is enabled to grant to such countries, upon
request, specified, time-limited exceptions in whole or in part from obligations under this
Agreement, taking into account their financial, trade and development needs.
(12)
GATS (Article 25)
1. Service suppliers of Members which are in need of such assistance shall have access to the
services of contact points referred to in paragraph 2 of Article IV.
2. Technical assistance to developing countries shall be provided at the multilateral level by the
Secretariat and shall be decided upon by the Council for Trade in Services.
   Agreement on Technical Barriers to Trade (Article 11.1,2)
1. Members shall, if requested, advise other Members, especially the developing country
Members, on the preparation of technical regulations.
2. Members shall, if requested, advise other Members, especially the developing countryMembers, and shall grant them technical assistance on mutually agreed terms and conditions
regarding the establishment of national sta ndardizing bodies, and participation in the
international standardizing bodies, and shall encourage their national standardizing bodies to do
likewise.
Agreement on The Application of Sanitary and Photosanitary Measures (Article 9.1,2) 
1. Members agree to facilitate the provision of technical assistance to other Members, especially
developing country Members, either bilaterally or through the appropriate international
organizations. Such assistance may be, inter alia, in the areas of processing technologies,
research and infrastructure, including in the establishment of national regulatory bodies, andmay take the form of advice, credits, donations and grants, including for the purpose of seeking
technical expertise, training and equipment to allow such countries to adjust to, and complyWT/WGTI/W/104
Page 15
with, sanitary or phytosanitary measures necessary to achieve the appropriate level of sanitary or
phytosanitary protection in their export markets.
2. Where substantial investments are required in order for an exporting developing country
Member to fulfil the sanitary or phytosanitary requirements of an importing Member, the latter
shall consider providing such technical assistance as will permit the developing country Member
to maintain and expand its market access opportunities for the product involved.
Agreement on TRIPS (Article 66.2, 67)
66.2. Developed country Members shall provide incentives to enterprises and institutions in their
territories for the purpose of promoting and encouraging technology transfer to least-developed
country Members in order to enable them to create a sound and viable technological base.
67. In order to facilitate the implementation of this Agreement, developed country Members
shall provide, on request and on mutually agreed terms and conditions, technical and financialcooperation in favour of developing and least-developed country Members. Such cooperation
shall include assistance in the preparation of laws and regulations on the protection and
enforcement of intellectual property rights as well as on the prevention of their abuse, and shall
include support regarding the establishment or reinforcement of domestic offices and agencies
relevant to these matters, including the training of personnel.
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