RESTRICTED
WORLD TRADE G/TRIMS/W/10
3November 1997
ORGANIZATION(97-4802)
Original: English Committee onTrade-Related Investment Measures
QUESTIONS RAISED BYTHE UNITED STATES
Reproduced herewith arequestions which thedelegation oftheUnited States posed tothe
delegations ofBrazil, Colombia, Argentina andUganda under theagenda item"Notifications under
Article 5.1oftheAgreement" atthemeeting oftheCommittee heldon15September 1997.
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Brazil: With respect toProvisional Measures 1532 and1536 (andanysubsequent related measures
which mayhaveextended, modified orreplaced these measures) please answer separately foreach
measure thefollowing questions:
(1) What isthebasis, ifany,forBrazil tojustify theWTO-consistency forthelocalcontent
andtrade-balancing aspects andrequirements ofeachmeasure (inparticular describing
theparticular WTO agreement provisions thatsupport suchaposition, anddescribing
whysuchmeasures donotviolate Articles IIIandXIofGATT 1994)?
(2) Whether eachprovisional measure isrelated toanynotified TRIM, andifnot,why
themeasure hasnotbeennotified asaTRIM?
(3) Whether Brazil contends thateachmeasure isaTRIM, andifnot,thenwhynot?and
(4) What steps Brazil istaking toeliminate eachmeasure, including anytimetables or
estimates forwhen theymaybedismantled?
Colombia: Asreflected inparagraph 21oftheMinutes of17March, theUnited States delegation
raised questions concerning theColombian statement that"Colombia isstudying thepossibility of
transforming theabsorption policy intoSectoral Competitiveness Agreements". Inthiscontext, please
answer thefollowing questions:
(1) What wasmeant bytheSectoral Competitiveness Agreements?
(2) When thistransformation wasintended totakeplace? and
(3) What domestic legalmechanism would beusedforthispurpose?
Argentina: Withreference tothe"addendum" notification concerning theArgentine Automotive regime
madetotheTRIMsCommitteeon21March1997,aswellastheoriginalnotificationmadebyArgentina
totheTRIMs Committee on10April 1995 (the"original notification"), please answer thefollowing
questions.G/TRIMS/W/10
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A. Changes inLocal Content Requirements inDecree 33/96
Theoriginally notified AutoDecree 2,677/91 provided thatproducers mayincorporate upto
40percentimported parts andcomponents (42percentforcategory Bvehicles). TheDecree goes
ontosaythatbeginning in1995 anduntil31December 1999, themaximum import content indices
agreed tounder MERCOSUR shallgovern, "which maynotbelower thanthose established herein
forthisinitial period" (i.e., import content ceiling nolower than40percent). Ourreview ofthe
subsequent decrees notified intheoriginal TRIMs notification didnotreveal anychange inlimits on
imported content.
However, newly notified Decree 33/96 reduces thepermissible import content below levels
specified intheoriginal notified decrees andArgentina 'sTRIMs notification: before required local
content could benogreater than60percent; now,localcontent under Decree 33/96 bytheyear1999
must beatleast67.5percent.
1. How does Argentina justify itsconclusion thattheaddendum notification and
Decree 33/96 donotconstitute aviolation ofTRIMs Article 5.4?
2. How doesArgentina justify thismeasure inlightofitsWTO obligations?
3. Totheextent Argentina claims thatthechange ofthecalculation method forlocal
content fromtheAFORO totheFOBmethod isthejustification forthechange, please
explain exactly howsuchachange hasfunctioned inpractice since 1996. Provide a
specificanalysisonanindustry-widebasissupportingArgentina'sclaimthat,onaverage,
thelocalcontent requirements ofthenewly notified measure 33/96 arenotmore trade-
restrictive thantheprovisions oftheDecrees notified intheoriginal notifications.
B. Concerns about theApplication ofModel-Specific Application ofLocal Content Ratios
Theoriginal TRIMs notified Decree states thatuntil31December 1995, import content may
beaveraged overvarious vehicle categories. However, Article 3ofthenewTRIMs notification in
Decree 33/96 modifies Article 5oftheoriginal notification tostatethatbeginning in1996, import
content indices apply toaspecific model.
4. Please statewhether theunderstanding oftheUnited States concerning thischange
between theoriginal andaddendum notification iscorrect. Ifnot,thenstatewhatthe
system isforaveraging local content, andwhat thedifferences arebetween the
provisions oftheoriginal andaddendum notified measures regarding thisaspect of
theArgentine Automotive regime.
5. Please statehowthechange, ifany,from anaverage toaspecific-model system
described above isconsistent withArticle 5.4oftheTRIMs Agreement, provide actual
examplesofhowthesystemfunctionsinpractice,andanindustry-wideanalysisshowing
thatsuchchanges havenotmade thesystem more trade-restrictive.
C. Decree 33/96 alsoappears toexpand thescope ofthemeasure toautoparts manufacturers,
stating inparagraph 3that"thedecree alsoincludes asystem forautopart manufacturers along
thesame linesasthose which theregime laysdown forvehicle assemblers". Theoriginally
notified Decree appeared toonlyapply toimports andexports byautomotive "assemblers",
nottoautoparts manufacturers.G/TRIMS/W/10
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6. Istheunderstanding oftheUnited States concerning thechanges between theoriginal
notified measures andtheaddendum measures correct? Ifnot,thenwhat arethe
changes, ifany,between thetwosetsofmeasures?
7. Please explain whythechanges between Decree 33/96 andtheoriginally notified
measures arenotinconsistent withTRIMs Article 5.4.
Uganda: AstheUnited States andmany other delegations haverepeatedly stated inTRIMs Committee
meetings, thetimely filing ofTRIMs notifications within 90daysoftheentry intoforce oftheWTO,
i.e.,by31March 1995, isasubstantive legal requirement inorder forWTO developing andleast
developing countries toreceive thebenefit ofthetransition periods ofTRIMs Article 5.2.Uganda,
however, didnotnotify itsTRIM within therequired 90days. Thus, theUnited States cannot agree
withthestatement thatUganda willmake thechanges toitsInvestment Code "within theperiod provided
forinthe[TRIMs] Agreement". IntheviewoftheUnited States, Uganda hasnolegalcover under
theTRIMs Agreement.
Inlightofthesecomments, theUnited States would request fromtheUganda delegation when
itexpects tochange thelocalcontent provisions ofitsinvestment law?