WORLD TRADE  
ORGANIZATION  RESTRICTED  
 G/TRIMS/M/10  
15 April 1999  
 (99-1500)  
  Committee on Trade -Related Investment Measures   
 
 
 
MINUTES  OF  THE  MEETING  HELD  ON  8  MARCH  1999  
 
Chairperson:  Mr. Dimitrij Grčar  (Slovenia)  
 
 
1. The Committee on Tra de-Related Investment Measures held its tenth meeting on 8 March 
1999.  The meeting was convened in Airgram WT O/AIR/1016/Rev.1.  
2. The Committee adopted the following agenda:  
A. Notifications under Article 5.1 of the Agreement on Trade -Related Investment 
Meas ures 
B. Notifications under Article 6.2 of the Agreement on Trade -Related Investment 
Measures  
C. India – Export and Import Policy, April 1997 -March 2002  
D. Observer Status for International Intergovernmental Organizations  
E. Other Business  
F. Election of O fficers  
3. The Chairman  reminded delegates that, following the meeting, there was to be an informal 
consultation to allow for a preliminary exchange of views on Article 9 of the TRIMs Agreement.  
This informal consultation was open to all Members.  
A. NOTIFICA TIONS  UNDER  ARTICLE  5.1 OF THE  AGREEMENT  ON TRADE -RELATED  
 INVESTMENT  MEASURES  
4. The Chairman  recalled that at the meeting of 14 September 1998, several Members had 
provided responses to questions posed by the United States on the notifications they had subm itted 
under Article 5.1.  Subsequent to that meeting, the answers provided by Colombia had been circulated 
in document G/TRIMS/W/17.  In addition, at the last meeting there had been an exchange of views on 
a request made by the United States for informatio n on how Members having made notifications 
under Article 5.1 intended to comply with Article 5.2.  
5. The representative of the United States  said it had been almost a year since his delegation had 
first requested Members notifying TRIMS to provide basic infor mation on steps they intended to take 
to implement the TRIMS Agreement – i.e. to eliminate local content and trade -balancing TRIMS.  
The deadline under Article 5.2 of the TRIMS Agreement was less than a year away.  To date, no 
Member with a TRIMS notificat ion had provided any information with respect to its plans, legislative 
or otherwise, as to what steps were being taken in anticipation of this deadline.  The United States 
continued to take this commitment under Article 5.2 seriously and was prepared to e xercise its rights 
in this respect.  While there was perhaps no explicit obligation regarding such information, there was 
a general obligation under Article 6.3 to consult on any matter arising from the Agreement.  From the G/TRIMS/M/10  
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perspective of the local industr ies which the measures were intended to advantage, it would be in their 
interests to know sooner rather than later what changes were coming so that they, too, might prepare 
appropriately.  His delegation was encouraged, however, to notice in a recent newsp aper report that a 
WTO Member was taking steps anticipatory to eliminating its local content measures by 1 January 
2000.  The replacement measures appeared to be WTO consistent even though they at the same time 
seemed to maintain some protection for the Me mber's local industry.  
6. The representative of Switzerland  said her delegation shared the concerns voiced by the 
United States.  Article 5 of the TRIMS Agreement not only obliged Members to notify non -
compatible measures, but also set out specific deadlines for the phasing out of those measures.  The 
elimination of these measures was important for the credibility of the international trading system.  As 
her delegation had stated previously, this process should take place in a transparent fashion.  Since the 
1 January 2000 deadline was fast approaching and the Committee would likely be meeting formally 
only once more before that date, her delegation wished formally to request information on what steps 
had been or would be taken for the elimination of measures n otified under Article 5.1, as required by 
Article 5.2.  
7. The representative of Bolivia  stated that her delegation would soon send a notification saying 
that Bolivia did not apply any TRIMS that were inconsistent with the Agreement.  
8. The representative of Costa Rica said his delegation wished to inform the Committee of its 
decision to act in advance of the deadline set for complying with the obligation to eliminate TRIMS 
notified by his country under Article  5.1.  In 1995, Costa Rica had notified its only exist ing measure 
that was not in conformity with the TRIMS Agreement, as found in document G/TRIMS/N/1/CRI/1.  
This measure concerned the percentage of local content in exported products that had to be achieved 
by subscribers to an export contract as an essenti al condition for receiving a Tax Credit Certificate 
(known as a "CAT").  The CAT was granted to those natural or legal persons, national or foreign, who 
had signed an export contract with the Government prior to December 1992.  The export contract was 
an instrument for granting benefits to firms that exported non -traditional products to third markets.  
The CAT was a freely negotiable, non -interest yielding, bearer document which ceased to be valid 24 
months after its maturity date.  It was issued by the Cen tral Bank of Costa Rica, denominated in the 
national currency, and it was used to pay direct or indirect taxes, which the Central Bank was 
responsible for collecting as the State cashier.  On 30 September 1999, the last day of the 1999 fiscal 
year, all rem aining export contracts would expire definitively.  Similarly, pursuant to the relevant 
legislative and regulatory provisions, the Costa Rican Government would cease to issue CATs from 
that date.  In so doing, his Government was complying ahead of the five -year time -frame granted to 
Costa Rica as a WTO developing -country Member for removing the TRIMS notified.  In the near 
future his delegation would be sending a written communication to the WTO Secretariat reporting on 
the full scope of this decision.  
9. The representative of Japan  said his delegation fully associated itself with the statements 
made by the United States and Switzerland.  So far no Member had answered the questionnaire put 
forward by the United States on the elimination of TRIMS measures.  This  raised doubts regarding 
whether those Members which had TRIMS to eliminate were taking their obligations seriously.  It had 
been pointed out at the last TRIMS Committee meeting that answering this questionnaire was a matter 
of transparency, as provided un der Article 6.3.  Given that the deadline for the elimination of TRIMS 
notified under Article 5.1 was less than a year away, his delegation was of the view that concrete 
plans for their elimination should be put forward to the Committee as soon as possible . 
10. The representative of Canada  said her delegation wished to reiterate its concern regarding the 
need for some Members to eliminate TRIMS notified under Article 5.1 by 2000 as committed, and its 
concern that this be done in a transparent manner.  Her deleg ation was encouraged by the information 
provided just now by some Members on the timely elimination of their TRIMS.   G/TRIMS/M/10  
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11. The Committee took note  of the statements made and agreed  to revert to notifications under 
Article 5.1 at its next meeting.  
B. NOTIFICATIONS  UNDER ARTICLE  6.2 OF THE  AGREEMENT  ON TRADE -RELATED  
INVESTMENT  MEASURES  
12. The Chairman  said that notifications submitted so far under Article 6.2 were listed in 
document G/TRIMS/N/2/Rev.5 of 22 February 1999.  As was apparent from this document, a 
considerable  number of Members had not yet complied with this notification requirement.  He 
therefore urged all Members to submit notifications under Article 6.2 as soon as possible.  
13. The representative of Slovenia  then indicated that his delegation would be submitting  an 
Article 6.2 notification shortly.  
14. The representative of Ecuador  noted that his delegation had submitted an Article 6.2 
notification.  
15. The Committee took note  of the statements made and agreed  to revert to this agenda item at 
its next meeting.  
C. INDIA  – EXPORT   AND   IMPORT   POLICY,   APRIL  1997 -MARCH  2002  
16. The Chairman  recalled that this item concerned certain measures applied by India with 
respect to automobiles.  In response to questions posed by Japan and the United States on these 
measures (G/TRIMS/W/12 a nd 13), India had submitted replies, circulated in October 1998 in 
documents G/TRIMS/W/15 and 16.  
17. The representative of the United States  said his Government remained seriously concerned 
with what it viewed as blatant TRIMS violations in Public Notice 60.  It was his delegation's view that 
the measures were economically significant, and that the notice contained a number of violations of 
the TRIMS Agreement.  The local content measure alone seemed severe, as 50 -70 per cent local 
content was required.  At th e December consultations held at the request of the European 
Communities and joined by Japan and the United States, India had indicated that it had no plans to 
eliminate Public Notice 60 until 2002.  The United States considered India's currency reserves t o be 
sufficiently large to preclude any justification for this measure on balance -of-payments grounds.  His 
delegation therefore requested the removal of Public Notice 60 as soon as possible.  
18. The representative of the European Communities  recalled that his  delegation had requested 
formal WTO consultations with India in October and that the consultations had been held on 
2 December.  As the procedure was still pending, his delegation did not wish to discuss here the 
details of the Indian measures relating to  the automotive sector.  His delegation was awaiting India's 
replies to the written questions his delegation had put forth at the meeting in December.  
19. The representative of Japan  said that his delegation had joined in the GATT Article XXII 
consultations he ld last December between the European Communities and India with regard to India's 
measures affecting the automotive sector.  His delegation had also raised issues relating to the 
automotive sector in a bilateral context with India.  India had argued that it had balance -of-payments 
problems and that for this reason its current measures in the automotive sector were justified under 
Article 4 of the TRIMS Agreement.  However, his delegation doubted whether India truly had a 
serious balance -of-payments problem , and in this regard it agreed with what had been stated by the 
representative of the United States.  For example, an economic survey which had been published by 
the Indian Government on 24 February stated that "India's balance -of-payments has remained 
moderately comfortable, with some reserve accumulation."  The current account deficit widened to 
1.6 per cent of GDP, or US$6.5 billion in 1997 -98.  In 1998 -99, it was estimated to have fallen as a G/TRIMS/M/10  
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per cent of GDP below that previous year's level.  Therefore,  his delegation was interested in the 
outcome of the ongoing dispute settlement proceedings between the United States and India in this 
regard.  India had argued that the conclusion of the memorandum of understanding between the 
private corporations and th e Indian Government was done voluntarily on the part of private 
corporations and was not compulsory, thereby not infringing upon the WTO Agreement.  However, 
unless a corporation concluded a memorandum of understanding with the Indian Government, it could 
not import complete -knock -down or sub -knock -down autos.  Thus, these measures were virtually 
compulsory for corporations, giving rise to concerns about the consistency of India's current auto 
regime with the WTO Agreement.  It seemed appropriate for India to abolish its current policy of 
conditioning the publishing of import licenses upon the acceptance of the local content requirement as 
well as the import -export balancing requirement.  His delegation hoped that this issue would be 
solved in a manner that would enhance India's auto -related trade and investment in a manner 
consistent with the WTO Agreement.  
20. The representative of Australia  associated her delegation with the concerns expressed by 
Japan, the United States and the European Communities regarding India's export and import policies, 
both generally and specifically relating to the automotive sector.  
21. The representative of India  recalled that at the last Committee meeting his delegation had 
responded to questions put forth by certain Members.  Since th at meeting, India had also participated 
in consultations under the DSU.  These had been fairly detailed consultations, in which there had been 
a substantive exchange of views, and certain issues remained to be clarified.  His delegation was in 
the process of examining some of the issues which had been raised and some of the specific requests 
which had been made by the European Communities delegation, in particular the request for statistical 
data.  In view of the fact that the matter was under consideration  within the dispute settlement process, 
he preferred not to reply here to the substantive issues raised by the United States and Japan.  
However, he reiterated that the measures introduced by India with regard to the complete -knock -down 
or sub -knock -down k its needed to be viewed in the context of India's balance -of-payments position.  
A related point which came out in the consultations was that, since the accepted nomenclature of the 
World Customs Organization did not differentiate between fully assembled p assenger cars and 
passenger cars in the form of knock -down kits, a similar import restriction on such kits had become 
applicable.  India was in the process of phasing out its existing quantitative restrictions, and under the 
proposed phase -out plan, this p articular restriction was to be phased out by 2002.  It had been for this 
interim period only that the Indian Government had felt it necessary to use a mechanism by which this 
particular restriction could be administered in a transparent and objective mann er.  His delegation had 
taken note of the comments made and, as stated earlier, hoped to resolve these issues in a mutually 
satisfactory way.  
22. The Committee took note  of the statements made and agreed  to revert to this matter at its next 
meeting.  
D. OBSERVER  STATUS  FOR  INTERNATIONAL  INTERGOVERNMENTAL  
ORGANIZATIONS  
23. The Chairman  recalled that the Committee had received requests for observer status from 
three international intergovernmental organizations, i.e. the Inter -American Development Bank,  the 
Latin Americ an Economic System and the Islamic Development Bank.  He proposed that, in light of 
the ongoing consultations in the framework of the General Council on the issue of observer status for 
international intergovernmental organizations, Members agree to defer consideration of these requests 
until a later time.  
24. The Committee so agreed .  G/TRIMS/M/10  
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E. OTHER  BUSINESS  
25. [No delegation wished to raise a matter under this item of the agenda.]  
F. ELECTION  OF OFFICERS  
26. The Chairman  recalled that the Committee's rules of procedure provided for the election of a 
chairperson and a vice -chairperson at the first meeting of each year.  The chairperson and the vice -
chairperson were to hold office until the end of the first meeting of the following year.  As Members 
were aware, the subsidiary bodie s of the Council for Trade in Goods formally elected their 
chairpersons after the Council for Trade in Goods had taken note of a list of candidates which had 
been agreed in consultations held by the Chairman of that Council.  Unfortunately,  this year ther e had 
been a delay in the completion of those consultations, and it was expected that a list of candidates 
would be presented to the Council at a meeting later in the month.  Under those circumstances, he 
suggested that, in order to avoid the need to conve ne another meeting of the Committee for the sole 
purpose of the election of officers, the Committee agree to elect as a new chairperson the person who 
would be nominated by the Council for Trade in Goods at its next meeting.  He also proposed that the 
issue of the election of a new vice -chairperson be taken up at the next meeting of the Committee.  
27. The Committee so agreed .1 
Date of the next meeting  
28. The Chairman proposed that the Committee hold a meeting on 13 September 1999.  He noted 
that this did not precl ude the possibility of meeting at an earlier date, if necessary.  
29. The Committee so agreed . 
Informal meeting  
30. The Committee shifted into an informal mode for a preliminary exchange of views on the 
review of the TRIMS Agreement according to Article 9.  The Chairman  indicated that he would 
convey the main points of the discussion to the Chairman of the Council for Trade in Goods.  
__________  
 
1 At its meeting of 25 and 30 March 1999, the Council for Trade in Goods agreed to a slate of names to 
chair certain subsidi ary WTO bodies.  Mr. Leo Palma (Philippines) was chosen as Chairman for the TRIMS 
Committee.  