RESTRICTED
WORLD TRADE G/TRIMS/M/6
12May1997
ORGANIZATION(97-1990)
Committee onTrade-Related Investment Measures
MINUTES OFTHE MEETING HELD ON17MARCH 1997
Chairman: Mr.Vassili Notis (Greece)
1. TheCommitteeonTrade-RelatedInvestmentMeasureshelditssixthmeetingon17March1997.
2. TheCommittee adopted thefollowing agenda:
A. NotificationsunderArticle5.1oftheAgreementonTrade-RelatedInvestmentMeasures
B. NotificationsunderArticle6.2oftheAgreementonTrade-RelatedInvestmentMeasures
C. Observer status forInternational Intergovernmental Organizations
D. Other business
- Statement bytheobserver forUNCTAD
E. Election ofofficers
A. NOTIFICATIONS UNDER ARTICLE 5.1OFTHEAGREEMENT ONTRADE-RELATED
INVESTMENT MEASURES
3. TheChairman noted thatcomments made attheprevious meeting onnotifications received
pursuanttoArticle5.1wererecordedinparagraphs3-32oftheminutesofthatmeeting(G/TRIMS/M/5).
Astatement made atthatmeeting bytherepresentative ofColombia andawritten response bythe
delegation ofKorea toaquestion raised atthatmeeting hadsubsequently been circulated in
documents G/TRIMS/W/5 and6,respectively. However, theCommittee hadnotyetreceived responses
torequests foradditional information orclarification onanumber ofother notifications andtoarequest
forthenotification ofaparticular measure. Since theprevious meeting oftheCommittee, newor
supplementary notifications under Article 5.1hadbeensubmitted bySingapore (G/TRIMS/N/1/SGP/1),
Israel(G/TRIMS/N/1/ISR/1),Indonesia(G/TRIMS/N/1/IDN/1/Add.1)andPoland
(G/TRIMS/N/1/POL/1/Add.1).
4. Therepresentative oftheUnited States noted thatindocument G/TRIMS/N/1/IDN/1/Add.1,
whichpurportedtowithdrawthesectionconcerningmotorvehiclesinthenotificationmadebyIndonesia
inMay1995 (G/TRIMS/N/1/IDN/1), itwasstated that,inlightoffurther analysis ofthedecree on
which theoriginal notification wasbased, theIndonesian authorities hadconcluded thatthemeasure
inquestion wasnotaTRIM. Hepointed outthatintheoriginal notification Indonesia hadstated that
themeasure regarding motor vehicles fellwithin thescope ofitem1(a)oftheIllustrative Listannexed
totheTRIMs Agreement, thatitwasapplied under mandatory legislation andthatenterprises which
complied withthelocalcontent requirement fordomestically made motor vehicles orcomponents were
allowed toenjoy certain incentives intheformoflower import dutyratesforpartsand/or components
ofmotor vehicles, depending uponthepercentage oflocalcontent contained intheproduct inquestion.G/TRIMS/M/6
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Against thisbackground, herequested theIndonesian delegation toprovide adetailed explanation of
theanalysis which hadledtheIndonesian authorities toconclude thatthismeasure should nolonger
beconsidered tobeaTRIM. Hisdelegation doubted thattherehadbeenanychanges inthelocalcontent
measure thatjustified thisconclusion orthatthepurpose ofmeasures currently applied byIndonesia
regarding motor vehicles differed fromthepurpose stated intheoriginal notification, namely "tosupport
andencourage thedevelopment oftheautomotive industry inIndonesia byregulating thelocalcontent
ratesofdomestic motor vehicles orcomponents". Hestressed thatArticle 5.4oftheTRIMs Agreement
wasasubstantive obligation andthatthere wasnoprovision intheTRIMs Agreement forwithdrawal
ofanotification. Indonesia 'spurported withdrawal ofitsTRIMs notification wastherefore anullity
anddidnotmean thatthemeasure inquestion wasnolonger aTRIM.
5. TherepresentativeofIndonesiaobservedthat,whilehisdelegationhadwithdrawnthenotification
totheTRIMs Committee ofthemeasure concerning motor vehicles, ithadnotified themeasure to
theCommittee onSubsidies andCountervailing Measures, which itconsidered theappropriate forum.
Henoted thatIndonesia 'smeasures onautomobiles hadbeen thesubject ofintensive bilateral
consultations between Indonesia andtheUnited States, inwhich context Indonesia hadprovided detailed
responses toquestions raised bytheUnited States. Herequested thattheUnited States submit inwriting
thequestions which ithadraised atthismeeting sothathisauthorities could prepare written responses.
6. Therepresentative ofCanada requested thatresponses thathadapparently beenprovided by
Indonesia inbilateral consultations withtheUnited States andanyfurther questions thattheUnited States
might decide toraisebedistributed tothefullCommittee. Itwasvaluable forallMembers tohave
information onthereasons forIndonesia 'sapparent withdrawal ofitsnotification. More generally,
itshould bestandard procedure thatquestions andanswers onmatters discussed intheCommittee be
circulated toallMembers. Inthiscontext, healsoreiterated therequest made byhisdelegation at
theprevious meeting (paragraphs 22and23ofG/TRIMS/M/5) thatArgentina submit totheCommittee
answers provided bilaterally toJapan onrecent measures ofArgentina withrespect toautomobiles.
7. Therepresentative ofJapan disagreed withtheassertion inIndonesia 'srecent notification that
themeasure concerning motor vehicles wasnotaTRIM. Themeasure hadasignificant impact on
investment andinvolved alocalcontent requirement within themeaning ofitem1(a)oftheIllustrative
List. Thishadbeenclearly recognized byIndonesia initsoriginal notification. Hisauthorities were
therefore concerned about Indonesia 'sarbitrary withdrawal ofitsnotification. Heseconded therequest
byCanada thatrelevant information provided byIndonesia bilaterally totheUnited States bealso
circulated totheCommittee.
8. Therepresentative oftheEuropean Community stated thathisdelegation continued tobe
seriouslyconcernedaboutIndonesia'slocalcontentmeasuresforautomobileswhichwereclearlycovered
bytheTRIMs Agreement.
9. Therepresentative ofthePhilippines saidthatanyWTO Member hadtherighttonotify what
itbelieved tobeaTRIM andtodecide ontheforum inwhich tomake anotification. Henoted that
localcontent measures werealsodealtwithintheAgreement onSubsidies andCountervailing Measures.
There could bemany reasons explaining whyaWTO Member might decide tomake orwithdraw a
notification, including thefootnote toArticle 5.1oftheTRIMs Agreement.
10. TherepresentativeoftheUnitedStatesnotedthaton18December1996theBrazilianGovernment
hadadopted Provisional Measure No.1,532 toprovide fortaxincentives andother benefits, for
automotive investments intheNorth, North-East andWest-Central Regions ofBrazil. Manufacturers
whomettargets forlocalcontent andexport performance wereeligible forbenefits intheformofimport
dutyreductions. Heasked whatwasthejustification ofthisrecently introduced TRIM, whether itwas
related toanynotified TRIM, andwhatsteps Brazil wastaking toeliminate thisprovision.G/TRIMS/M/6
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11. Therepresentative oftheUnited States alsorecalled thatonseveral occasions theCommittee
haddiscussedmeasuresintroducedbyBrazilinDecember1995underDecreeNo.2,072andsubsequently
renewed byProvisional Measure No.1,536 which reduced theimport duties oncapital goods, parts
andrawmaterials thatwere inputs toorusedintheproduction ofvehicles. Hisdelegation wished
toknow whatsteps Brazil wastaking toeliminate these measures, which wereclearly inviolation of
theTRIMs Agreement.
12. Therepresentative ofBrazil responded thatinbilateral consultations heldattherequest ofthe
United States hisdelegation hadexplained indetail thelegaljustification ofthemeasures inquestion.
These measures hadbeennotified totheCommittee onSubsidies andCountervailing Measures and
would beterminated attheendof1999. Hisdelegation sawnoreason whyinformation onthese
measures provided inthespecific context ofbilateral consultations requested byonedelegation should
alsobesubmitted totheCommittee.
13. Therepresentative ofJapan stated thattheregional investment measures announced byBrazil
inDecember 1996 inProvisional Measure No.1,532 hadexpanded thescope ofincentives related
tolocal content andtrade-balancing measures incomparison with themeasures introduced in
December 1995inProvisional Measure No.1,235. Forexample, therewasnowacomplete exemption
fromimport duties onimports ofcapital goods. Japan hadbeenholding bilateral consultations under
ArticleXXIIofGATT1994withBrazilonissuesarisingfromthemeasurescontainedinthe1995Decree
andwastherefore concerned withtherecent changes tothese measures inadirection which increased
theirinconsistency withtheTRIMs Agreement.
14. Therepresentative ofJapan alsoreiterated hisdelegation 'sconcerns regarding theconsistency
withtheTRIMs Agreement ofmeasures applied byArgentina inrespect ofautomobiles.
15. Therepresentative ofArgentina responded thatArgentina 'smeasures intheautomotive sector
were fully consistent with theTRIMs Agreement. With respect tothecomment made bythe
representative ofCanada, hesaidthathisauthorities wereconsidering Canada 'srequest forcirculation
totheCommittee ofanswers toquestions which Argentina hadprovided onabilateral basis.
16. Therepresentative oftheUnited States noted thatinprevious meetings hisdelegation had
expressed serious doubts thatmeasures applied byArgentina inrespect ofautomobiles were in
compliance withtheTRIMs Agreement. Argentina hadprovided written answers toquestions raised
byhisdelegation onthese measures andhebelieved thatitwasincumbent onArgentina tomake these
answers alsoavailable toother Members.
17. Therepresentative ofArgentina responded that,inconsidering whether toprovide tothe
Committee information provided onabilateral basis, hisauthorities attached great importance tothe
needtoprotect thecommercial interests oftheenterprises involved.
18. TherepresentativeoftheUnitedStatesthankedthedelegationofColombiaforthecomprehensive
answers ithadprovided indocument G/TRIMS/W/5 topoints raised intheCommittee regarding
Colombia 'snotification inG/TRIMS/N/COL/2. These answers setaverygood precedent forother
delegations. Heobserved thatthestatement inSection IIoftheanswers provided byColombia that
"[t]he National Government willmake fulluseofthetime-periods established fordeveloping countries"
seemed toassume thatColombia could benefit fromatransition period offiveyears, asprovided for
intheTRIMs Agreement. However, Colombia hadnocover forthese TRIMs because ithadfailed
tonotify themwithin 90daysfromthedateofdeposit ofitsinstrument ofratification on30March 1995.
Colombia hadsubmitted thenotification inG/TRIMS/N/COL/2 onlyon31July1995. Heasked the
delegation ofColombia toexplain howtheColombian authorities considered thattheycould benefit
from thetransition period when theyhadnotified theTRIMs outside the90dayperiod. Since theG/TRIMS/M/6
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measures werenotcovered bythetransition period, hewasalsointerested indetails about phase-out
plans forthese measures.
19. Inregard totheremark inColombia 'sanswers that"Colombia isstudying thepossibility of
transforming theabsorption policy intoSectoral Competitiveness Agreements", heasked what was
meant bySectoral Competitiveness Agreements, when thistransformation wasintended totakeplace
andwhatdomestic legalmechanism would beused forthispurpose.
20. TherepresentativeoftheEuropeanCommunityreiteratedtheviewofhisdelegationthat,because
ofthelatesubmission ofthenotification, theagricultural absorption policy applied byColombia could
notbenefit fromatransition period under theTRIMs Agreement. Moreover, hisdelegation alsohad
greatdifficultiesunderstandingwhyColombiahadchosentonotifythismeasureasaTRIM.Colombia's
statement circulated inDecember 1996 treated thismeasure asalocalcontent requirement within the
meaning ofparagraph 1(a)oftheIllustrative List. Thisitemhadtobeinterpreted inthecontext of
theprohibition inArticle IIIofGATT 1994ofinternal measures which discriminate against imported
products.HisunderstandingwasthattheagriculturalabsorptionpolicyofColombiainvolvedthegranting
ofimport licenses depending upon thequantity ofdomestic goods absorbed. Assuch, thismeasure
didnotfallwithin thescope oftheinternal measures covered bythenational treatment requirement
ofArticle IIIbutwasmore properly seenasaborder measure which should havebeentariffied in
thecontext oftheAgreement onAgriculture.
21. Therepresentative ofColombia noted thatherdelegation hadexplained itsviews onthe
agricultural absorption policy onvarious prioroccasions, bothinthisCommittee andintheCommittee
onAgriculture. Themeasures wereusedasanalternative totheapplication oftariff ceilings bound
byColombia intheUruguay Round andnotinaddition tothese tariff ceilings. Colombia considered
thatthismeasure wasmoreeffective forachieving national objectives andatthesametimelessrestrictive
ofinternational trade thantheapplication ofbound ceilings. Shedisagreed withtheinterpretation
advanced bytheUnited States ofthedeadline forthesubmission fornotifications under Article 5.1
andobserved thattheperiod of90daysshould becounted fromthedateofentry intoforceoftheWTO
Agreement foraparticular Member, which was30daysafterthedateofdeposit ofinstrument of
ratification. Herdelegation would provide more detailed information inwriting onthepoints raised
bytheUnited States onthesectoral competitiveness agreements. Sheasked thattherepresentative
oftheEuropean Community submit inwriting hisquestion onwhether themeasure notified fellwithin
thescope oftheTRIMs Agreement.
22. Therepresentative ofPakistan stressed theneedforaflexible interpretation oftherequirement
ofnotification ofTRIMs within 90daysaftertheentry intoforce oftheWTO Agreement. Ashad
beendiscussed inotherWTO bodies, developing countries and,inparticular, least-developed countries
werefacing difficulties inmeeting notification requirements inWTO agreements. Itwasalsoimportant
tointerpret Article 5.1inconjunction withthesubstantive requirements contained inArticles 5.2and
5.4.Article 5.2made itclearthattheperiod fortheelimination ofnotified TRIMs began onthedate
ofentry intoforce oftheWTO Agreement, notonthedateofnotification oftheTRIMs. Likewise,
Article 5.4stipulated thatmeasures introduced lessthan180daysbefore theentry intoforce ofthe
WTO Agreement could notbenefit from thetransition period. Thecombined effect ofArticles 5.2
and5.4wastherefore thatadelay inthesubmission ofanotification under Article 5.1didnotaffect
thesubstantive obligations ofaMember.
23. TherepresentativeoftheEuropeanCommunityrecalledthatthedecisiontakenbytheCommittee
ontheimplementation ofArticle 5.1inthecaseofMembers accepting theWTO Agreement after
1January 1995(WT/L/64) made itveryclearthattheperiod of90daysbegan onthedateofthedeposit
oftheinstrument ofratification.G/TRIMS/M/6
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24. Therepresentative oftheUnited States stated thatArticle 5.1contained amandatory obligation
tonotify measures within theperiod of90days. Hisdelegation wasespecially concerned about the
notification submitted byColombia because oftheinterrelationship ofthemeasure inquestion with
theAgreement onAgriculture.
25. Regarding anotification submitted byNigeria indocument G/TRIMS/N/1/NGA/1, the
representative oftheUnited States requested aclarification ofthestatement thatthereexisted "incentives
fortheuseoflocalrawmaterials, onanon-discriminatory basis, under theIndustrial Policy ofNigeria".
These incentives would appear tobeinconsistent withtheTRIMs Agreement andhisdelegation was
therefore concerned about thesubmission ofthisnotification ayearandahalfaftertheexpiry ofthe
deadline forthesubmission ofnotifications under Article 5.1.Hecongratulated Poland forwithdrawing
itslocalcontent measure withrespect tocashregisters (G/TRIMS/N/1/POL/1/Add.1).
26. Therepresentative ofJapan seconded thestatements made bytherepresentatives ofthe
European Community andtheUnited States regarding theinterpretation ofthetimelimitinArticle 5.1
oftheAgreement.
27. Therepresentative ofAustralia requested thatthedelegation ofColombia alsodealinitswritten
answers tothequestions oftheUnited States andtheEuropean Community withaquestion raised earlier
byherdelegation onthemethod usedfordetermining theratioofdomestic absorption toimports.
28. TherepresentativeofColombiasaidthatherdelegationwouldrespondinwritingtothisquestion.
29. TheChairman saidthatanumber ofdelegations hadanswered questions raised onnotifications
and/or hadundertaken todosointhefuture inwriting. Hesuggested theendofJune1997 asan
indicative dateforthesubmission ofsuchresponses, which would appear toprovide areasonable period
oftimefordelegations toprepare them. Healsosuggested thatquestions onnotifications, including
those raised atthepresent meeting, beprovided inwriting assoonaspossible.
30. Therepresentative ofColombia saidthatherdelegation would make every effort torespond
assoonaspossible butwasnotinaposition tocommit toaparticular date.
31. Therepresentative ofArgentina saidthathewould convey thepoints raised atthismeeting
tohisauthorities butreserved hisdelegation 'sposition onthequestions ofcirculation totheCommittee
ofanswers toquestions raised inthecourse ofbilateral consultations.
32. TheCommittee tooknoteofthestatements made andagreed torevert atitsnextmeeting to
notifications made under Article 5.1oftheTRIMs Agreement.
B. NOTIFICATIONS UNDER ARTICLE 6.2OFTHE TRIMS AGREEMENT
33. TheChairman recalled thatattheprevious meeting theCommittee hadadopted adecision on
theimplementation oftherequirement ofArticle 6.2regarding notification ofpublications inwhich
TRIMs maybefound. Thisdecision (G/TRIMS/5) provided forthesubmission ofinitial listsofsuch
publications by1February 1997. Document G/TRIMS/N/2 of24February 1997 contained the
communications received sofarpursuant tothisdecision. Since thedateofcirculation ofthisdocument,
notifications under Article 6.2hadbeenreceived fromAustralia andThailand. Given thatonlyeight
Members hadsubmitted anotification under Article 6.2,heurged allMembers topresent their
notification without delay. Healsoasked those Members which hadnotyetsubmitted anotification
toexplain whether theyhadperhaps encountered particular difficulties inmeeting thisrequirement.G/TRIMS/M/6
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34. Therepresentative ofPerusaidthatherdelegation hadmade anotification under Article 6.2
inthecourse ofFebruary.
35. Therepresentative oftheUnited States, theEuropean Community andSwitzerland stated that
theirdelegations would submit notifications under Article 6.2inthenearfuture.
36. TheCommittee tooknoteofthestatements made andagreed torevert atitsnextmeeting to
notifications under Article 6.2oftheTRIMs Agreement. TheSecretariat would update thelistof
notifications contained indocument G/TRIMS/N/2 asappropriate.
C. OBSERVERSTATUSFORINTERNATIONALINTERGOVERNMENTALORGANIZATIONS
37. TheChairman recalled thatinJuly1996 theGeneral Council hadadopted procedures onthe
question ofobserver status forinternational intergovernmental organizations intheWTO (WT/L/161,
Annex 3).These procedures provided thatrequests forobserver status shall beconsidered ona
case-by-case basisbyeachWTO bodytowhich arequest wasaddressed, taking intoaccount suchcriteria
asthenature ofthework oftheorganization concerned, thenature ofitsmembership, thenumber
ofWTO Members intheorganization, reciprocity withrespect toaccess toproceedings, documents
andother aspects ofobservership, andwhether theorganization hadbeeninvolved inthepastwith
thework oftheGATT. After consultations onhowtoapply these procedures, theGeneral Council,
atitsmeeting of7February 1997, noted thattheIMFandWorld Bank hadbeengiven observer status
intheGeneral Council andother WTO bodies asprovided forintheAgreements between theWTO
andthese twoinstitutions. With regard toother international intergovernmental organizations, the
General Council hadagreed thattheorganizations thatalready hadobserver status intheGeneral Council
onanadhocbasisbegrantedobserverstatusimmediatelyandthattheChairmanwouldholdconsultations
concerning those organizations whose requests hadnotyetbeenconsidered. TheCouncil hadinvited
other WTO bodies toproceed inasimilar way.
38. Against thisbackground, theChairman proposed thattheCommittee grant regular observer
status tointernational intergovernmental organizations listed inSection Iofdocument G/TRIMS/W/7
thathadalready beengranted observer status intheCommittee onanadhocbasis(IMF, OECD, UN,
UNCTAD andWorld Bank).
39. Itwassoagreed.
40. Regarding therequest forobserver status bytheInter-American Development Bank, mentioned
inSection IIofdocument G/TRIMS/W/7 asanorganization whose request forobserver status was
pending, theCommittee agreed torevert tothismatter withaviewtotaking adefinitive decision at
itsnextmeeting following consultations tobeconducted bythenewChairman. TheCommittee
authorized theChairman toinvite theIDBtoattend thatmeeting, inthelightoftheoutcome ofthe
consultations.G/TRIMS/M/6
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D. OTHER BUSINESS
- Statement bytheobserver forUNCTAD
41. Theobserver forUNCTAD made astatement onactivities undertaken byUNCTAD inthe
areaofinvestment pursuant todecisions taken attheUNCTAD IXConference andatthefirstsession
oftheUNCTAD Commission onInvestment, Technology andRelated Financial Issues, heldin
November 1996 andJanuary 1997.1
42. Withreference toapoint made bytheobserver forUNCTAD regarding cooperation between
UNCTAD andtheWTO, therepresentative ofCanada observed thatthenewly created WTO Working
Group onTrade andInvestment, rather thantheTRIMs Committee, wastheproper forum within which
toconsider thismatter.
43. Therepresentative ofMexico stated that,given thattheTRIMs Agreement wasexplicitly
mentioned inthedecision ontrade andinvestment adopted attheSingapore Ministerial meeting, it
could notbeexcluded thatthisCommittee hadaroletoplayinwork intheWTO ontrade and
investment.
44. TheCommittee tooknoteofthestatements made.
E. ELECTION OFOFFICERS
45. TheCommittee elected Mr.Javier Paulinich (Peru) asChairman andMr.Atsuyuki Oike(Japan)
asVice-Chairman.
DateoftheNext Meeting oftheCommittee
46. TheCommittee agreed toholditsnextmeeting on15September 1997.
1Thetextofthisstatement hasbeen distributed indocument G/TRIMS/W/8.