RESTRICTEDWORLD TRADE
ORGANIZATIONG/TRIMS/M/16
27 June 2003
(03-3438)
Committee on Trade-Related Investment Measures
MINUTES OF THE MEETING HELD ON 19 JUNE 2003
Note by the Secretariat
1. The Committee on Trade-Related Investment Measures met on 19 June 2003 under the
Chairmanship of Mr. Vassili Notis (Greece). The Committee adopted the agenda contained in
WTO/AIR/2107/Rev.1.
A. NOTIFICATIONS UNDER ARTICLE 6.2 OF THE TRIM S AGREEMENT
2. The Chairman said that notifications submitted under Article 6.2 of the TRIMs Agreement
were listed in document G/TRIMS/N/2/Rev.10, da ted 9 December 2002. No further notifications had
been submitted since that date. He noted that a number of Members had not yet complied with the
notification requirement under Article 6.2, and he urged all Members which had not yet done so to
submit their notification as soon as possible. The Committee agreed to revert to this item at its next
meeting.
B. PROPOSALS ON SPECIAL AND DIFFERENTIAL TREATMENT PROVISIONS REFERRED TO THE
COMMITTEE ON TRADE -RELATED INVESTMENT MEASURES BY THE CHAIRMAN OF THE
GENERAL COUNCIL .
3. The Chairman noted that two proposals on special and differential treatment (S&D) had been
referred to the TRIMs Committee by the Chairman of the General Council, which were reproduced in
the Airgram convening the meeting. He recalled that the TRIMs Committee had been instructed to
take up these issues as soon as possible, on the basis of a specific time schedule of work, and to reportto the last meeting of the General Council before the Cancún Ministerial Conference on the status of
the proposals and the progress made.
4. He informed Members that the main purpose of the present meeting was to consider the S&D
proposals that had been submitted by the African Group and to discuss the organization of workwithin the deadline that had been set by the Chai rman of the General Council. He then invited the
delegation of Kenya to introduce the proposals submitted by the African Group.   
5. The representative of Kenya, speaking on behalf of the African Group
, recalled that at the
informal meeting of the Committee held on 12 June 2003, a number of delegations had supported the
African Group's proposals,  while others had requested further information and clarifications on them.
6. In seeking to respond to these requests, he said that it was well known that governments had
extensively made use of trade-related investment measures and other performance requirements as
policy tools to achieve various objectives, in particular industrial development. In this regard, he madereference to the joint study prepared by the WTO and UNCTAD Secretariats (G/C/W/307 and Add.1),
which clearly stated that TRIMs had been used by many countries, including the developed countries.
On the other hand, the TRIMs Agreement prohibited the use of certain TRIMs that were considered to
be inconsistent with the GATT rules on national treatment and the prohibition on quantitativeG/TRIMS/M/16
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restrictions. However, the TRIMs Agreement explicitly  provided flexibility to developing countries to
deviate temporarily from the provisions of Article 2 to the extent and in such a manner as
Article XVIII of GATT 1994 permitted. In this respect, a developing-country Member could deviate
from the provisions of Article III and Article XI of the GATT 1994 for two reasons: (i) to grant
protection required for the establishment of a particular industry; and (ii) to apply quantitativerestrictions for balance-of-payments purposes.
7. He recalled that at Doha, Ministers had reaffirmed this flexibility as an S&D treatment
provision for developing countries. Therefore, in his delegation's view, the implementation of this
provision should reassure developing countries that they would be able to apply TRIMs flexibility
using the procedures provided under Article XVIII of the GATT 1994. The phrase "free to deviate
temporarily from the provisions of Article 2" could therefore be invoked for two reasons: infantindustry or balance-of-payment (BOP) purposes. It could be argued that for BOP purposes it was not
necessary to specify the time-limit and that such  instances could be considered on a case-by-case
basis. However, in the case of  infant industry adequate time was required to nurture the industry and
definite legal protections were necessary to guarantee returns to investors. In his delegation's view, at
least six years should be considered as a reasonable and appropriate period of time for an infantindustry to mature.
8. Turning to the second proposal, he said that this concerned Article 5.3 of the TRIMs
Agreement and its relationship with the Agreement on Subsidies and Countervailing Measures (SCM
Agreement). He recalled that Article 5.3 of the TRIMs Agreement provides that, on request, theCouncil for Trade in Goods may extend the transitio n period for the elimination of TRIMs notified
under the Agreement, for a developing-country Memb er or a least-developed country Member, which
demonstrates particular difficulties in implementing the Agreement. On the other hand, Article 27.3 of
the SCM Agreement allows for a temporary exemption from the prohibition to apply subsidies
contingent upon the use of domestic over imported goods contained in Article 3.1(b) of the SCMAgreement. This exemption applied to developing-c ountry Members for a period of five years, and to
least-developed country Members for a period of eight years, from the date of the entry into force of
the WTO Agreement (i.e., 1 January 1995). He recognized that these temporary exemptions had
already expired. However, the proponents believed that developing countries should be given the
flexibility to seek further extensions beyond the transition period in order to meet various
development needs and objectives in accordance with Article 27.1 of the SCM Agreement.  In
response to questions that had been raised at th e previous informal meeting concerning Annex VII of
the SCM Agreement, he said that the countries listed  in that annex were not obliged to seek extension
of the transition period as they were exempted from the provisions of paragraph (a) of Article 3.1 of
the SCM Agreement. He said that his delegation was ready to engage with other delegations to
explore whether a solution to these issues could be found as soon as possible.
9. The representative of India thanked Kenya for explaining the rationale of the proposals on
Articles 4 and 5.3 of the TRIMs Agreement on behalf of the African Group. His delegation fully
understood the thrust of the proposals, i.e., the need for appropriate flexibility for developing and
least-developed country Members to deviate temporarily from Article 2 of the TRIMs Agreement and
to maintain TRIMs in specific conditions to meet  their developmental objectives. The proposal on
Article 4 partly sought to reaffirm what had already been agreed by Ministers at Doha regarding
Article XVIII of GATT 1994. His delegation could broadly support the African Group's proposal on
Article 4, and took note of the explanation given by Kenya regarding the definition of the phrase "free
to deviate temporarily from the provisions of Article 2" as not less than six years. His delegation was
flexible on the time-period. With respect to the proposal on Article 5.3 of the TRIMs Agreement, hethanked Kenya for the clarifications to the questions  that had been raised at the informal meeting of
the Committee. India understood the rationale of the proposal and would be open to engage
constructively in any further discussion in this regard.G/TRIMS/M/16
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10. The representative of Canada said that his delegation had carefully examined the African
Group’s proposal for Special and Differential Treatment in regard to Article 4 of the TRIMS
Agreement. His delegation believed that the TRIMs Committee might not be the most appropriate
body to address the proposals. It was important to ensure that the proposals did not use one WTO
Agreement to nullify, modify or avoid provisions of another WTO Agreement.
11. With respect to paragraph (a) of the African Group’s proposal regarding TRIMs Article 4, he
said that the TRIMs Committee did not have a mandate to consider directly issues related to a
country’s external financial position, balance of payments or sufficiency of reserves. This fell within
the competence of the BOPs Committee, in accordance with BOP provisions. Article 4 of the TRIMS
Agreement was there to ensure that the Agreement did not constrain or nullify rights under the BOPs
provisions. It did not create new rights or obligations in respect to BOPs. Turning to the second partof paragraph (a) of the proposal, he said that the intention of paragraph 1.1 of the Ministerial Decision
on Implementation-Related Issues and Concerns would certainly be taken into account when reading
Article XVIII, whether directly or through Article 4 of the TRIMs Agreement. He therefore asked the
African Group why they felt it was necessary to refer to  the Ministerial Decision explicitly in relation
to Article 4 of the TRIMs Agreement.   As regards paragraph (b) of the African Group’s proposal, he
recalled there was a procedure under Article XVIII for determining the period of time during which
"deviation" from the provisions might be necessary, and the relevant circumstances and conditions
attached thereto. He said that the proponents had not demonstrated that there was a problem with the
existing procedure found in Article XVIII, and that if there were problems with the application of this
provision, the TRIMs Committee was not the appropriate body to review GATT Article XV III. In
Canada's view, it would be inappropriate for the TRIMS Committee arbitrarily to alter provisions that
were set out in other WTO Agreements.
12. Turning to the proposal on TRIMS Article 5.3, he said that this proposal was in line with the
Ministerial Decision on Implementation-Related Issues and Concerns, which under paragraph 6.2stated that Ministers  "urge the Council for Trade in  Goods to consider positively requests that may be
made by least-developed countries under Article 5.3 of the TRIMs Agreement or Article IX.3 of the
WTO Agreement, as well as to take into consideration the particular circumstances of least-developed
countries when setting the terms and conditions including time frames." The Doha Ministerial
Decision on Implementation-Related Issues and Concerns captured the existing language under
Article 5.3.  His delegation would appreciate clarification on how the African Group understood the
relationship between Article 5.3 of the TRIMs Agreement and paragraph 6.2 of the November 2001Ministerial Decision on Implementation-Related Issues and Concerns. Noting that another aspect of
the proposal related to the SCM Agreement, he reiterated the view that it would be inappropriate to
use certain provisions of this Agreement to nullify or circumvent the provisions set out in the TRIMs
Agreement.
13. He then made some specific points relating to the proposal. He recalled that the last sentence
of Article 5.3 of the TRIMs Agreement reads:  "In considering such a request, the Council for Trade
in Goods shall take into account the individual deve lopment, financial and trade needs of the Member
in question." He noted that the African Group's proposal used similar language in its opening sentence
but omitted the word "individual", and he asked why this term had been removed. He also asked the
proponents what they meant by "fresh transition period". He wondered whether this meant thatMembers would notify new TRIMs or existing TRIMs and be granted an extension for those
measures. Finally, he inquired whether the proponents were seeking an extension of the transition
periods under Article 27.3 of the SCM Agreement, which had already expired as had been stated by
Kenya. If that were the case, he said that the TRIMs Committee was not the appropriate body to
provide such extensions.
14. The representative of Brazil thanked Kenya for the explanation of the proposals. He said his
delegation did not agree with Canada's interpretation that the TRIMs Committee was not the properG/TRIMS/M/16
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place to address this issue, because Article 4 of the TRIMs Agreement itself referred to GATT
Article XVIII and allowed for a deviation from the prohibition in Article 2 based on balance-of-
payments considerations. He understood that the Af rican Group's proposal sought to make sure that
Members took into account the Ministerial Decision on Implementation regarding Article XVIII when
evaluating Members' requests for deviating from the prohibition under Article 2 of the TRIMsAgreement. He therefore asked Canada to further explain why the TRIMs Committee was not he
proper place to address this issue. The African Group was not proposing to reopen the balance-of-
payments provisions, rather they were proposing how Members should interpret the Ministerial
Decision on Implementation and how it could be taken into account when evaluating developing
countries' requests for deviating from the prohibition in Article 2 of the TRIMs Agreement as
provided for in Article 4. In his view, the TRIMs Committee was the proper forum to discuss the issue
and he remained to be convinced otherwise. His delegation could agree to the African Group'sproposal. It seemed to be reasonable and all Members should discuss it in a constructive way so as to
contribute towards solving the S&D issues. He recall ed that at the most recent informal meeting some
Members had stated that they did not see the need for the proposal, yet they did not oppose it. If that
were the case, then there would be no harm in adopting the proposal. He asked Members to explain
where in the African Group's proposal they saw an intention to reopen the balance-of-paymentsprovisions referred to in Article 4 of the TRIMs Agreement.
15. Regarding paragraph (b) of the proposal on Article 4, he sought clarification from Kenya on
whether the time-period of "not less than six years" referred to the balance-of-payments provisions or
to the infant industry provisions. These were two completely different issues and Members should not
mix them when considering the proposal. He understood from Kenya's presentation that they wereproposing two different amendments to Article 4, and that paragraph (b)  referred to infant industry.
Therefore, Members should not understand the six years period as relating to the BOP provisions. He
asked Kenya to confirm this point.
16. The representative of Kenya responded that a developing-country Member could deviate from
the provisions of Articles III and XI of GATT for two reasons: one was for infant industry purposes
and the other for balance-of-payments problems. His proposal did not refer to the issue of BOP – the
BOP provisions were very clear – but to the issue of infant industry. As regards the possibility to
deviate temporarily from the TRIMs Agreement, developing countries needed to have a definite time-
period that would be clear for everybody. This was the intention of the proposal. In response to
Canada's question regarding Article 27.3 of the SC M Agreement, he said that the African Group was
seeking flexibility for developing countries, not an extension of the transition periods.
17. The representative of Brazil understood that the proposal on Article 4 included two separate
issues and said that Members would contribute to the clarity of the debate if they could address the
second part of the proposal referring to the minimum period of six years in the context of infant
industry and not in the context of BOP.  He insi sted that the two issues should not be mixed.
18. In response to the question posed by Brazil, the representative of Canada said that it was
important to ensure that proposals did not use on e WTO Agreement to nullify, modify or avoid
provisions of another WTO Agreement. He took note of Kenya's clarification that the proposal in
paragraph (b) related only to infant industry under Article XVIII. However, he failed to understand
why the TRIMs Committee should be setting guidelines for the interpretation of GATT Article XVIII.
Referring to Brazil's statement that because there was no harm in the proposal it should be accepted,
he said that he would reverse the rhetoric by saying: "if it is not broken, don't fix it". His delegationdid not yet understand what was "broken", therefore it saw no need to fix it.
19. The representative of Brazil understood that Canada had no substantive problem with the
African Group's proposal as far as the first paragraph was concerned. From the clarification by Kenya,
he had understood that the six years time-period for deviating from TRIMs provisions did not refer toG/TRIMS/M/16
Page 5
Article XVIII. The proposal referred to infant industry, not to BOP. He reiterated that he did not
understand why Members were trying to mix this issue. The African Group's proposal did not seek to
change the BOP provisions.
20. The representative of the United States said that it was clear that the African Group's proposal
had nothing to do with Article XVIII:B, which was under the competence of the BOPs Committee.
On he other hand, it was also clear that the proposal was related to Article XVIII:C, which referred to
the infant industry provision. Therefore, the pro posal did not belong in the BOPs Committee. Given
that the proposal was related to Article XVIII:C, he recalled that this Article laid out a detailed
procedure on how to deal with infant industry arguments. In his delegation's view it was not clear why
it was necessary to amend Article XVIII:C up-front. This would mean that if a country applied for
Article XVIII:C for infant industry protection, an a priori  span of time would be decided on. In his
view, a guiding principle in the WTO was that the least-disruptive deviations from the Agreementsshould be followed. In addition, it might well be that a particular country did not need a six-year
period for deviation. It was impossible to talk on a theoretical basis on the merits of the proposal;
what Members needed was to examine concrete cases. The proponents had not presented concrete
examples nor had they explained what problems there were with the existing procedures in
Article XVIII:C and why it was necessary to change  this long-standing provision. His delegation had
systemic concerns about deciding on theoretical matters where there were no concrete cases, because
if faced with concrete situations Members might come to different conclusions. He explained that if
there had been a significant number of requests for infant industry protection and no progress made in
this regard, then action to deal with the issue would have been justified. However, since that was not
the case, his delegation was reluctant to deal with theoretical issues that did not appear to be related toreal world problems.
21. Referring to the proposal on Article 5.3, he said his delegation was not aware of any group of
countries requesting for extensions of the transition period. If they were, there existed procedures,
including Article IX of the WTO Agreement. He asked the proponents to explain where the
difficulties were and what they wanted under the proposal on Article 5.3 in order to have an idea ofwhat Members would be agreeing to before go ing ahead with the proposal. Again, Members were
presented with a theoretical case that might not have any takers at all. On the other hand, it might have
so many takers that Members would regret after the f act that they had agreed to a theoretical proposal,
whose practical implications they did not understand. Members needed to talk about concrete cases
and concrete problems.
22. The representative of the European Communities said his delegation associated itself with the
United States in that they approached the proposals with an open mind but were waiting to see what
the specific problems were in order to come up with solutions. The proposed approach, however, did
not provide specific explanations of problems, but only ready-made solutions that would apply
automatically. His delegation shared the scepticism of the United States. Referring to paragraph (b) of
the proposal on Article 4, he said that if the infant industry argument had a value, it had to be assessed
on a case-by-case basis, and that a priori  automaticity should not be introduced with the six-year
period without a justification. His delegation favoured a case-by-case approach that would fix time-
periods as long as necessary to respond to the specific needs of each case.  As regards the proposal on
Article 5.3, he said that this also aimed to introduce automaticity by requiring the Council for Trade in
Goods to grant extensions, as indicated by the words "shall grant". In his view, the case-by-case
approach was more appropriate in this instance too.  He then asked the proponents whether thecountries that would potentially benefit from this proposal were solely the least-developed countries
or also the developing countries. If the latter were also included, he asked which were these countries.
Furthermore, he asked for concrete examples showing the problems Members faced with the current
procedures.  His delegation did not see why Members should introduce automaticity in the procedures
to deviate from the TRIMs disciplines. He asked Ke nya to clarify whether the idea was to have new
requests authorized for countries who up to now ha d benefitted from exceptions but whose transitionG/TRIMS/M/16
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periods had come to an end. Referring to paragraph (a) of the proposal on Article 4, he said that his
delegation was not aware of problems of incompatibility between the BOP and TRIMs provisions, so
he wondered what these problems were. Moreover, he asked Kenya to confirm whether they were
only seeking to reaffirm the Ministerial Decision on Implementation Issues or whether they wanted to
go further. In the latter case, he inquired what the value added of paragraph (a) was.
23. The representative of China said his delegation supported the African Group's proposals.
24. The representative of Japan focused on two points. First, regarding paragraph (b) of the
proposal on Article 4, his delegation was of the vi ew that the time-period for deviation should be
examined on a case-by-case basis and was not convinced by the Kenyan argument that not less than
six years was a reasonable period for LDC Members. Second, with respect to the proposal on
Article 5.3, he said that as far as he knew there had been no request for an extension of the transition
period from LDC Members. He asked the proponents to give some specific examples of LDCMembers willing to request for such extensions so  as to justify the need for the changes being
proposed.
25. The representative of Canada, in response to the comment made by Brazil that Canada
seemed to be able to agree with paragraph (a) of the proposal on Article 4, said that his delegation was
not at a stage of saying whether it could agree or not agree to the proposal. His delegation was simplytrying to understand its purpose and effects, and in Canada's view, the proponents had yet to
demonstrate what the proposals sought to achieve.
26. The representative of Brazil said that the reference made to GATT Article XII in
paragraph (a) of the proposal on Article 4 clearly indicated that this part of the proposal related to
BOP issues under Article XVIII:B. His delegation u nderstood that this part of the proposal did not
create any new rights and obligations, but simply reaffirmed that Article XVIII:B was a development
provision and that developing countries resorting to it should not be treated as strictly as under
Article XII of the GATT. The second part of the proposal referred to infant industry and was not
related to BOP.  He took note that no Member had opposed to the first part of the proposal. He said
that neither Canada nor other Members had explained why they thought that this proposal was seekingto reopen the BOP provisions and he asked for clarification on this point.  As regards the six-year
period, it was clear that the LDCs were trying to address a separate issue, which Brazil and India were
also seeking to address under the implementation agenda and under the mandated review of Article 9
of the TRIMs Agreement. From his delegation's experience with the implementation of the Uruguay
Round Agreements, it was clear that the TRIMs Agreement had to be re-balanced so as to provide
developing countries with more policy-space flexibility to adopt industrial policies and to address
infant industry issues, among others. He also no ted that Japan had commented on the six-year period
but it had not opposed the proposal. He asked the Japanese delegation to explain if it had any
problems with the proposal. Brazil was ready to discuss the time-period; perhaps six years was too
short. He then referred to the joint study by the WTO and UNCTAD Secretariats and stressed the
point that many Members had used TRIMs over very  long periods of time. He did not understand why
developing countries, which were only reaching the stage where they could benefit from TRIMs,should be prevented from using the same instruments. This issue should be discussed separately. BOP
was one thing and how Members had benefitted from this policy space and how developing countries
could recover the same flexibility in order to adopt industrial policies was another.
27. The representative of the European Communities said that it was his delegation's
understanding that the provision in paragraph (a) of the proposal relating to the Ministerial Decision
on Implementation had been referred to the BOPs Committee for further interpretation and that the
BOPs Committee had not reached a definitive interpretation of it. He agreed with Canada that
Members needed to avoid making explicit references to provisions whose interpretation was not clear
and which were currently being discussed in other committees. He said it would be useful if theG/TRIMS/M/16
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Secretariat could consult with the BOPs Committee on the status of the discussions concerning this
issue.
28. The Chairman said that debate had been useful in helping Members to better understand the
proposals under consideration. However, he felt that there were a number of aspects that needed to be
further clarified and discussed.  Also, there had been divergent views regarding the possible outcomeand implications of the proposals. He proposed therefore that the Committee take note of the
statements made. He said that he intended to inform the new Chairman of the Committee -who would
be elected at the end of the meeting- about the present debate on the S&D proposals and would
recommend to him that he undertake informal consultations on this issue as soon as possible.
29. The representative of Brazil recalled that the S&D proposals had been divided into three
categories for their consideration and explained the rationale of this classification. From the
discussion the TRIMs Committee had had so far, he felt that while Members might not understand theneed of the proposal concerning the relationship between BOPs and TRIMs provisions (i.e.,
paragraph (a) of the proposal on Article 4), they did not have difficulties with its substance. Therefore,
he suggested that this proposal be elevated to Category I.  In his view, this would help to reduce the
amount of work left for further clarification in the TRIMs Committee, and to create a positive climate
towards the Cancún Ministerial as regards the S&D agenda.
30. The representative of the United States said that his delegation was not clear about the
implications of elevating the citation of the Ministerial Decision on Implementation to Category I or
whether this was something the TRIMs Committee could do. He would need to consult further on this
issue so he was not in a position to agree to the Brazilian suggestion. The representative of theEuropean Communities felt it was premature to take such a decision at this stage. His delegation
needed first to have a clearer idea on what the BOPs Committee had decided in connection with theMinisterial Decision on Implementation. The representative of India said that, from the discussions in
the TRIMs Committee, Brazil had felt that there were no fundamental differences with  regard to thefirst part of the proposal on Article 4, and that the spirit of its suggestion was to give a positive signalthat the TRIMs Committee had examined the proposal and felt that progress could be made in that
regard. He also pointed out that elevating a propos al to Category I did not mean that Members had
agreed to it.
31. The Chairman concluded that there was no consensus on the Brazilian suggestion.
C. ELECTION OF OFFICERS
32. The Committee elected Mr. Sivaramen Palayathan (Mauritius) as its Chairman.
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