RESTRICTEDWORLD TRADE
ORGANIZATIONG/TRIMS/M/8
20 July 1998
(98-2868)
Committee on Trade-Related Investment Measures
MINUTES OF THE MEETING HELD ON 16 MARCH 1998
Chairperson:  Mr. Javier Paulinich (Peru)
1. The Committee on Trade-Related Investment Measures held its eighth meeting on
16 March 1998.
2. The Committee adopted the following agenda:
A. O BSERVER STATUS FOR INTERNATIONAL INTERGOVERNMENTAL ORGANIZATIONS
B. N OTIFICATIONS UNDER ARTICLE 5.1 OF THE AGREEMENT ON TRADE -RELATED 
INVESTMENT MEASURES
C.N OTIFICATIONS UNDER ARTICLE 6.2 OF THE AGREEMENT ON TRADE -RELATED
INVESTMENT MEASURES
D.I NDIA -EXPORT AND IMPORT POLICY , APRIL 1997-M ARCH 2002
E.E LECTION OF OFFICERS
A. OBSERVER STATUS FOR INTERNATIONAL INTERGOVERNMENTAL
ORGANIZATIONS
3. The Chairman recalled that at the last meeting the Committee had informally discussed
pending requests for observer status from the Inter-American Development Bank, the Latin American
Economic System and the Islamic Development Bank.  Since the issue of observer status of
international intergovernmental organizations was the subject of informal consultations in the
framework of the General Council, he suggested that the Committee resume its consideration of these
requests at a later stage in the light of the outcome of those consultations.  It was so agreed.
B. NOTIFICATIONS UNDER ARTICLE 5.1 OF THE AGREEMENT ON TRADE-RELATED
INVESTMENT MEASURES
4. The Chairman recalled that at the meeting held in September 1997 questions had been posed
on a number of notifications submitted under Article 5.1 (G/TRIMS/M/7, paragraphs 3-14).  It had
been agreed at that meeting that the text of these questions would be made available in writing
immediately after the meeting and that delegations to which these questions were addressed wouldmake every effort to respond to them by mid-November.  Questions posed by the United States to the
delegations of Argentina, Brazil, Colombia and Uganda had subsequently been circulated inG/TRIMS/M/8
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document G/TRIMS/W/10. The Chairman also drew the Committee's attention to a recent notification
under Article 5.1 submitted by Nigeria (G/TRIMS/N/1/NGA/1/Add.1).
5. The representative of Colombia responded to several questions posed by the United States in
document G/TRIMS/W/10 regarding a statement made by Colombia in document
G/TRIMS/N/COL/2 that it was "studying the possibility of transforming its agricultural absorptionpolicy into Sectoral Competitiveness Agreements".   She explained that sectoral competitiveness
agreements were an integral part of the general development policy in Colombia and provided a
framework for concerted action among the various actors participating in the production process of a
branch or subsector with a view to improving the efficiency and enhancing the level of
competitiveness of each productive branch.  In the specific case of agriculture, the Government
played a leading role in the process of cooperation among private firms, with the participation of
various  state agencies.  The sectoral competitiveness agreements included , inter alia , measures in
regard to the adoption or upgrading of technology, enterprise management and the social and
macroeconomic framework.  These agreements were implemented  in a manner consistent with the
commitments undertaken by Colombia at the international level.  In response to the question posed by
the United States as to when the transformation of the absorption policy into sectoral competitiveness
agreements was intended to take place, she stated that, given that the adherence to sectoralcompetitiveness agreements was voluntary on the part of private actors, it was not possible to  indicate
a precise date for the full implementation of the competitiveness strategy. In respect of the domestic
legal mechanism that would be used to effect this transformation, she pointed out that the adherence
to a sectoral competitiveness agreement was voluntary on the part of private actors and the
Government.  When the execution of the commitmen ts undertaken in the context of these agreements
implied the adoption of specific measures to improve the competitiveness of a particular activity,
these measures would be adopted by the compet ent authority in accordance with Colombia's
international commitments.
6. The representative of the United States introduced written questions submitted by his
delegation to the delegations of Argentina, Venezuela, Colombia and Ecuador, Uganda, Nigeria and
India.1  He requested that, pursuant to Article 6.3 of the Agreement, these Members respond to these
questions in writing to the Committee prior to the next  meeting.  In regard to the questions addressed
to Argentina, he stated that the written responses provided by Argentina to questions raised by the
United States in G/TRIMS/W/10 on Decree No 33/1996 regarding Argentina's measures in the
automotive sector did not appear to address directly the three issues that had been raised in his
delegation's questions.  The questions posed by his delegation to the delegations of Colombia,
Ecuador and Venezuela were aimed at seeking clarification of the nature and the consistency with theAgreement of proposals that appeared to be under consideration for an amendment to the common
automotive regime of these countries that would entail increased local content requirements and a
continuation of the scheme during the period 1999-2004.  In respect of Uganda, his delegation would
appreciate receiving answers to the questions it had raised at the last meeting.  On the additional
notification recently submitted by Nigeria, he requested an explanation of how this notificationaffected the original notification submitted by Nigeria.  Finally, he requested the delegation of India to
explain the nature of the "dividend balancing" requirement notified by India in document
G/TRIMS/N/1/IND/ 1/Add.1, whether it covered the measures introduced in December 1997 by India
in regard to automobiles
2 and whether the Indian Government was of the view that these recently
introduced measures were consistent with Articles 5.4 and 5.2 of the Agreement.
7. In response to the first question addressed by the United States to Argentina, as to whether
Decree No. 33/1996 had entailed an increase in the level of required local content, the representative
of Argentina stated that his delegation had already clarified this issue at the last meeting, as recorded
                                                     
1 These questions have subsequently been circulated in document G/TRIMS/W/13.
2 See below, item D.G/TRIMS/M/8
Page 3
in paragraph 8 of the minutes of that meeting (G/TRIMS/M/7).  An analysis of the Decree in its
entirety showed that it did not make the existing regime more restrictive but that, on the contrary, it
was designed to open possibilities for increased imports in order to facilitate the adjustment of the
Argentine car industry to a more competitive envi ronment.  Regarding the second question raised by
the United States, which concerned the change to a model-specific measurement of local contentratios, he explained that this change was necessary to provide for more flexibility in the conditions of
competition of car manufacturers as the large number of new models produced by the car
manufacturers made it very difficult for them to comply with local content requirements measured by
category.  On the third question of the United States, which dealt with the application of the Decree to
manufacturers of auto parts, he stated that these manufacturers had always been subject to the
automotive regime and that the Decree only entailed a change of methodology.  Participation of parts
manufacturers in the regime was voluntary and ther efore did not amount to a restriction.  A large
number of parts producers had opted to continue to operate within the previous system.  In addition,
the new methodology should be seen in the wider cont ext of the more flexible administration of the
local content requirements provided for by the Decree.
8. The representative of Ecuador, speaking also on behalf of Colombia and Venezuela,
considered that the request of clarification expressed by the United States in respect of the nature and
consistency with the Agreement of proposals that appeared to be under consideration for amendment
to the Andean Pact automotive regime was premature.  The points made by the representative of the
United States would be conveyed to the authorities of these Members.
9. The representative of the European Community, referring to responses that Argentina
appeared to have provided bilaterally to the United States, requested that these responses also be
circulated in writing to the Committee.  His delegation wished to receive clarification on the nature of
the proposals that were the subject of considerat ion in regard to the common automotive regime of
Colombia, Ecuador and Venezuela.  He expressed concern both at the apparent increase in the level of
local content and the underlying assumption that the measures would continue in force beyond the
year 2000.
10. The representative of Brazil responded to the questions raised by the United States on
measures concerning the automotive regime established by Law 9,440 and applicable to certain less
developed regions of Brazil.  He recalled that some Members had requested, and Brazil had agreed to
hold, formal consultations on the automotive regime applied by Brazil at the national level.  These
national measures had been thoroughly discussed at formal joint consultations in the light of the
Agreement and other WTO Agreements.  The measures applicable to certain regions under Law 9,440
were very similar to the regime applied at the national level, which obviated the need for anotherdetailed presentation of the mechanism established in the regional regime.  In January 1997, Brazil
had notified to the Committee on Subsidies and Countervailing Measures the provisions of Law 9,440
that constituted subsidies (document G/SCM/ N/16/BRA/Suppl.1) and there had been ample
opportunity to discuss these provisions at a meeting of that Committee held on 1-2 May 1997.
Finally, he observed that the effects of Law 9,440 were minimal.  Only two assembling companieshad been authorized to import with benefits granted under the regime applicable to the specified
regions and only two manufacturers of auto parts had applied for the programme.  In the case of auto
parts the deadline for applications would lapse on 31 March 1998.
11. The representative of Japan stated that his authorities were examining the proposed
amendments to the common automotive regime of Colombia, Ecuador and Venezuela and that, if
these amendments were implemented in the manner pointed out by the representative of the United
States, this would be cause for serious concern.  He requested that answers to the questions raised by
the United States on these proposals be submitted in writing for circulation to the Committee.G/TRIMS/M/8
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12. The representative of Australia recalled that on several past occasions her delegation had
pointed to the need for transparency and for formal responses to questions raised in the Committee.
She referred in this respect to the responsibility assigned to the Committee under Article 7.3 to
monitor the operation and implementation of the Agreement.
13. The representative of Ecuador observed that, while he agreed with the importance of
transparency, the questions posed by the United States addressed issues that were still at the stage of a
proposal.
14. The representative of the United States supported the views of the representatives of the
European Community, Japan and Australia regarding the need for written answers to questions raised
in the Committee.  He hoped that the representative of Ecuador would answer his delegation's
questions either as they related to the proposed amendments or, after 31 May, to their implementation.
15. The representative of Argentina stated that his delegation had been fully transparent in regard
to Decree 33/1969 by notifying it and responding orally in the Committee to the questions raised on
this Decree.  If, on the basis of these responses, there remained concerns on the part of other
delegations, his delegation would attempt to respond to such concerns by the same procedure.
16. The representative of the United States stated that it was appropriate for all Members to begin
to focus on the commitments due to be made by 1 January 2000 under Article 5.2, which, in the case
of developing country Members, required the elimin ation within five years of the entry into force of
the Agreement of all TRIMs notified under Article 5.1.  In this connection, he observed that in other
WTO bodies, including the Safeguards Committee and the Customs Valuation Committee,
discussions had already begun concerning obligations entering into force on 1 January 2000 and that
Article 6.3 of the TRIMs Agreement provided that each Member shall accord sympatheticconsideration of requests for information on any matter arising from this Agreement raised by another
Member.  He then asked all Members having submitted notifications under Article 5.1 to answer
several specific questions relating to the internal procedures and timetables for the elimination of the
TRIMs covered by their notifications.3  Pursuant to Article 6.3 of the Agreement, he requested that
answers to these questions be provided in writing approximately one month prior to the next meetingof the Committee.
17. The representative of Switzerland said that it was appropriate to discuss in the Committee the
issue of the elimination of TRIMs notified under Article 5.1 as the deadline for their elimination was
approaching.  His delegation would also like to receive information on steps already taken by
Members in this regard.
18. The representative of Norway stressed the importance of the timely elimination of all TRIMs
and supported the idea of a transparent process of the kind suggested by the United Sates by which
Members could describe steps taken to remove their TRIMs.  This was consistent with the provisions
of Article 6.3 of the Agreement.
19. The representative of Argentina stated that the text of the Agreement was clear in regard to
the issue raised by the United States in that it did not require Members to provide information on the
phasing-out of measures notified under Article 5.1.  The balance of rights and obligationscontemplated in the Agreement should not be upse t and his delegation therefore saw no merit in the
initiation of a discussion in 1998 on the fulfilment of obligations that would become effective in the
year 2000.
                                                     
3 These questions have been circulated in document G/TRIMS/W/13, pp.3-4.G/TRIMS/M/8
Page 5
20. The representative of Japan seconded the comments made by the representatives of
Switzerland and Norway.  In response to the comme nt made by the representative of Argentina he
pointed to the Committee's responsibility under Article 7.3 to monitor the implementation and
operation of the Agreement.
21. The representative of Canada supported in principle the TRIMs Committee taking a more
active role in monitoring the implementation of the Agreement.
22. The representative of Pakistan shared the view expressed by the representative of Argentina
with respect to the absence of a requirement in the Agreement for Members to supply information on
the phasing-out of TRIMs.  While Article 6.3 required Members to accord sympathetic consideration
to requests for information by other Members, this could not be construed to amount to an obligation
to respond to questions.  In addition, in considering the issue of implementation of Article 5.2 account
should also be taken of the provisions of Article 9 of the Agreement.
23. The representative of Mexico stated that his understanding was that the United States had not
proposed that particular steps be taken by the Committee but had simply informed the Committee of
its intention to submit certain questions.  He stressed that the Agreement did not contemplate a
specific role for the Committee in respect of the implementation of Article 5.2.  By contrast, the
discussions in the other WTO bodies referred to by the representative of the United States proceededon the basis of provisions that required those bodies to take specific steps in regard to the
implementation of transition provisions.  He disagreed with the view that Article 6.3 implied an
obligation to submit written responses to questions raised by another Member.  Furthermore, the
request for information by the United States also seemed premature in the light of the possible
extension of the transition period of Article 5.2 by a decision of the Council for Trade in Goods, asprovided for in Article 5.3.
24. The representative of the Philippines, speaking on behalf of the ASEAN WTO Members,
supported the comments made by the representatives of Argentina, Mexico and Pakistan.  The legal
basis for the request by the United States was questionable.  The modalities of the implementation of
Article 5.2 were not matters arising from the operation of the Agreement within the meaning ofArticle 6.3.  Moreover, the request made by the United States prejudged the issue of possible recourse
to Article 5.3.
25. The representatives of Colombia, India
, Egypt , Costa Rica  and Venezuela  expressed their
support for the view that the Agreement did not provide for a role of the Committee as regards the
monitoring of the phasing-out of TRIMs notified under Article 5.1 and did not require Members to
provide information on steps taken to eliminate such TRIMs.
26. The representative of the European Community  observed that the Agreement provided for a
transition period for the elimination of measures th at had been inconsistent with GATT disciplines for
more than 40 years.  The questions raised by the United States were useful and consistent with the
task of the Committee under Article 7.3.  It was important not to wait until the last moment to
consider the implementation of Article 5.2.  Whether the questions posed by the United States were
answered in writing or orally was irrelevant.
27. The representative of New Zealand recalled that in the past her delegation had emphasized the
importance of timely preparation of the elimination of TRIMs.
28. The representative of Australia stated that there was a clear role for the Committee under
Article 7.3 and that the issue at hand raised the question of the modality for giving effect to this.  This
was important in order to ensure transparency.  She agreed with the comment of the EuropeanCommunity that the issue of the implementation of Article 5.2 could not be left until the last moment.G/TRIMS/M/8
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29. The representative of Japan reiterated his delegation's view that a discussion of the steps taken
by Members to comply with Article 5.2 was within the ambit of the role of the Committee under
Article 7.3 of the Agreement.
30. The representative of Mexico stated that the monitoring of the operation of the Agreement
envisaged in Article 7.3 must pertain to matters that had occurred in the past. However, the questions
raised by the United States related to future events.
31. The representative of Brazil said that it was interesting from a broader WTO perspective that
the European Community had made the point that Members should prepare for the implementation of
commitments in the year 2000.
32. The representative of the United States stressed that he had not made a proposal for particular
steps to be taken by the Committee but had only announced the submission of questions.  He agreed
with those representatives who had pointed to the need to begin preparing for the implementation ofcommitments due by the year 2000 and observed that only 18 months remained before the expiry of
the deadline of Article 5.2.  Contrary to what Mexico had stated, the questions posed by his delegation
did not pertain to future events but to existing procedures of Members to give effect to their
commitments under Article 5.2.  He considered that the implementation of Article 5.1 was certainly a
matter arising from this Agreement within the meaning of Article 6.3 and reiterated his request thatMembers accord sympathetic consideration to the questions raised by his delegation.
33. The representative of India considered that the generic transparency provisions of the
Agreement were not intended to alert governments to their obligations under specific substantive
provisions.  This issue was of more general interest and should perhaps be discussed at a higher level
in a horizontal context.
34. The Committee took note of the statements made.  The Chairman  said that the Committee
would revert to notifications under Article 5.1 at its next meeting.  He further said that the questions
raised by the United States would be circulated and that this matter needed to be considered in the
context of all the provisions of the Agreement, including Article 6.3.  He requested delegations to
submit answers to pending questions.
C. NOTIFICATIONS UNDER ARTICLE 6.2 OF THE AGREEMENT ON TRADE-RELATED
INVESTMENT MEASURES
35. The Chairman drew the Committee's attention to document G/TRIMS/N/2/Rev.2 which listed
notifications received so far under Article 6.2.  Although the Committee had agreed in
September 1996 that such notifications would be submitted by February 1997, a majority of
delegations had yet to submit their notifications.  He urged delegations to submit their notifications
under Article 6.2 without further delay.
36. The representatives of Japan, the European Community , Uruguay  and Costa Rica  stated that
their delegations had recently submitted or would shortly submit notifications under Article 6.2.
37. The representative of the United States observed that the publications to be notified under
Article 6.2 were those containing information on TRIMs regardless of whether the measures were
inconsistent with the Agreement.  Thus, his dele gation questioned whether some of the Members who
had provided notifications under Article 6.2 had fully complied with their obligations.  He mentioned
specifically the notifications made by Bulgaria;  Chile;  Hong Kong, China;  Indonesia;  Singapore;
and Venezuela.G/TRIMS/M/8
Page 7
38. The Committee took note of the statements made and agreed  to revert at its next meeting to
notifications under Article 6.2 of the Agreement.
D. INDIA - EXPORT AND IMPORT POLICY, APRIL 1997-MARCH 2002
39. The Chairman stated that this matter had been inscribed on the agenda of the meeting at the
request of the delegation of Japan.
40. The representative of Japan referred to a recent communication of his country circulated in
document G/TRIMS/W/11 which explained the concerns of his delegation in respect of a new policy
announced by the Government of India in December 1997 relating to the import by joint venture car
manufacturer companies of completely knocke d-down (CKD) kits, semi -knocked-down (SKD) kits
and parts.  Two particular points were raised in the communication.  First, there were local
requirements that obligated joint ventures in the automobile industry to "indigenise", as it was called
in the new policy, 50 per cent of CKD/SKD components and kits used in the manufacture ofautomobiles within three years after the first imports of "CKD/SKD components".  This ratio would
increase to 70 per cent within five years.  This requirement was, he stated, clearly inconsistent with
Article 3 of the GATT 1994 and with item 1(a) of the Annex of the TRIMs Agreement, which
prohibited the use of local content requirements.  The second point was the policy named "a broad
neutralization", which required joint venture manufacturers to achieve balancing requirements thatobligated them to export cars and car parts with an FOB value equal to the total CIF value of their
imports of "CKD/SKD kits/components".  This import-export balancing obligation would start from
the third year of production.  From the fourth year onwards, imports by a joint venture company might
be restricted based on the value of its exports during the previous years.  This measure was also
inconsistent with Article 11 of the GATT 1994 and was considered as the import-export requirementmentioned in item 2(a) of the Annex of the TRIMs Agreement.  In addition, as the meaning of the
phrase "a broad neutralization" was unclear, inconsistency could also be found with other articles of
the Agreement.  India's new auto policy had never been notified to the TRIMs Committee and could
therefore not benefit from the transition period of Article 5.2.  His delegation had held bilateral
consultations with India on this matter but these consultations had failed to resolve this matter.  Herequested the delegation of India to provide written answers to detailed questions prepared by his
delegation4 and to explain how India intended to comply with the Agreement in respect of these
measures.
41. The representative of the United States shared the concerns expressed by the representative of
Japan regarding the measures recently introduced by India in respect of automobiles and drew the
Committee's attention to questions raised by his delegation regarding the conformity of these
measures with India's obligations under the Agreement, particularly Articles 5.4 and 5.2.5
42. The representative of the European Community supported the statement of the representative
of Japan and noted that the Community had already on various occasions raised this matter bilaterally
with the Indian authorities.  His delegation consider ed that the measures introduced by India regarding
automobiles were not covered by India's notificat ion under Article 5.1 and were in violation of
Article 5.4 of the Agreement.  Furthermore, they involved the use of a special import licence that wasnot covered by the notification submitted by India in the context of the WTO balance-of-payments
provisions.
43. The representative of Switzerland stated that his delegation was concerned about the
introduction of any measure that was inconsistent with Article 2 of the Agreement.
                                                     
4 These questions have been circulated in document G/TRIMS/W/12.
5 G/TRIMS/W/13, p.3G/TRIMS/M/8
Page 8
44. The representative of India stated that his delegation would forward the questions raised by
the delegations of Japan and the United States to its authorities and submit written answers as soon as
it had received the necessary input from its capital.
45. The Committee took note of the statements made and agreed  to revert to this matter at its next
meeting.
E. ELECTION OF OFFICERS
46. The Committee elected Mr. Dimitrij Grcar (Slovenia) as its Chairman and
Mr. Fernando de Barreto (Brazil) as its Vice-Chairman.
Date of the next meeting
47. The Committee agreed to hold its next meeting on 14 September 1998.
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