   
  
WT/GC/W/896  
G/TRIMS/W/173  
WT/COMTD/W/284  
 
13 July 2023  
(23-4791) Page: 1/7 
General Council  
Committee on Trade -Related Investment Measures  
Committee on Trade and Development  Original: English  
 
 
A CASE FOR REBALANCING THE AGREEMENT ON TRADE -RELATED INVESTMENT 
MEASURES (TRIMS) – POLICY SPACE TO PROMOTE INDUSTRIALISATION AND 
STRUCTURAL TRANSFORMATION IN DEVELOPING COUNTRIES  
COMMUNICATION FROM THE AFRICA N GROUP (ANGOLA; BENIN; BOTSWANA; BURKINA FASO; 
BURUNDI; CABO VERDE; CAMEROON; CENTRAL AFRICAN REPUBLIC; CHAD; CONGO; CÔTE 
D'IVOIRE; DEMOCRATIC REPUBLIC OF CONGO; DJIBOUTI; EGYPT; ESWATINI; GABON; THE 
GAMBIA; GHANA; GUINEA; GUINEA -BISSAU; KENYA; LESOTHO; LI BERIA; MADAGASCAR; 
MALAWI; MALI; MAURITANIA; MAURITIUS; MOROCCO; MOZAMBIQUE; NAMIBIA; NIGER; 
NIGERIA; RWANDA; SENEGAL; SEYCHELLES; SIERRA LEONE; SOUTH AFRICA; TANZANIA;  
TOGO; TUNISIA; UGANDA; ZAMBIA AND ZIMBABWE)  
The following communication, dated 13 July 2023, is being circulated at the request of the African 
Group.  
 
_______________  
 
 
1  INTRODUCTION: TRIMS RULES AND DEVELOPMENTAL CHALLENGES FACING 
DEVELOPING COUNTRIES AND LDCS  
1.1.  Trade -related investment measures (TRIMs) are policy tools that have been crucial in efforts 
to advance industrial development and the creation of backward and forward linkages, enhancing 
technology transfer and local research and development, contributing to increasing local 
employment, and to addressing balance -of-payments concerns.1 These measures could be designed 
to attract foreign direct investment (FDI), encourage local entrepreneurship, and foster the growth 
of domestic industries. Moreover, these measures have been critical for effective industrial policies 
and have been widely  deployed by developed economies at some time in their industrialization 
process.2 
1.2.  TRIMs encompass a broad range of performance requirements and incentives that 
Governments may place on foreign investors. TRIMs may be used to pursue many different policy 
objectives, such as (a) promoting exports from the host country (export performance requirements 
and trade balancing requirements); (b) encouraging local production and improving productivity; 
(c) advancing economic and social policy goals, including job c reation; and (d) technology transfer.  
1.3.  The Agreement on Trade -Related Investment Measures (TRIMs Agreement) clarifies the 
application of Article III or Article XI of GATT 1994 in relation to investment measures related to 
trade in goods. It constrains the a bility of WTO Members to utilize many of these measures. Most 
prominent among them are those encouraging the expansion of domestic manufacturing activities, 
including those that involve small and medium enterprises. Some developed countries trying to 
 
1 G/C/W/307/Add.1 – joint study by the WTO and UNCTAD Secretariats . 
2 Kumar, N. and Gallagher, K., 2007.  'Relevance of Policy Space for Development: Implications for 
Multilateral Trade Negotiations '. New Delhi: Research and Information System for Developing Countries. See 
also : Kumar, N., 2005. Performance requirements as tools of develo pment policy: Lessons from developed 
and developing countries.  Putting Development First.  
Putting Development First: The Importance of Policy Space in the WTO and International Financial 
Institutions edited by Kevin P. Gallagher , Chapter  9 (2005): 89 -91. 
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  offset the limitations set by the TRIMs Agreement replaced measures covered by the Agreement 
with others that would be WTO compatible, such as adopting stringent rules of origin which have the 
same effect as local content regulations, through establishing certa in levels of regional content that 
have to be met for a product to benefit from free trade among them (i.e. to qualify as an originating 
product in a preferential trading agreement).3 
1.4.  For industrialization purposes, raising manufacturing productivity and moving into new 
technologies and products with a higher skill component are crucial.4 A 2007 study by UNCTAD5 
concluded that while the use of certain TRIMs is no longer an option in most WTO Member States, 
such objectives as promoting in dustrialization, improving the trade balance and encouraging local 
sourcing remain of high priority to developing country governments. To a large extent, that continues 
to be the case today.  
1.5.  TRIMs assume renewed importance in the policy toolbox that develo ping countries require 
today in order to address development and industrialization objectives. The industrialization 
imperative is particularly pressing in the African context. In Africa, the manufacturing sector 
accounted for only 12.4 per cent of nationa l income in 2021, short of the world average of 17 per 
cent.6 There is a wide productive capacity gap in manufacturing output between Africa and the rest 
of the world (figure 1). Even though Africa accounted for 18 per cent of the world population in 
2021, its share in the world manufacturing output was around 2 per cent. Asian economies, on the 
other hand, increased their productive capacities in the manufacturing sector significantly to account 
for 54 per cent of the world total in 2021.   
Figure 1: Share  of manufacturing value added by region and share of Africa in world 
population (per cent)  
 
 
Source: UNCTADStat.  
 
 
1.6.  UNCTAD has called for 'industrialization based on minimal use of fossil fuel machinery and an 
emphasis on local production to meet basic nee ds' and for 'coordinated industrial policies based on 
intellectual property and technology available within the global South '.7 TRIMs are particularly 
 
3 See: Ibid, Kumar and Gallagher (2007) and UNCTAD (2007), 'Elimination of TRIMs, the Experience of 
Selected Developing Countries '. According to these studies, such measures were applied within NAFTA and the 
EU.  
4 G/C/W/307/Add.1, page 19  
5 For more information on history of TRIMS negotiations, see: UNCTAD (2007), 'Elimination of TRIMs, 
the Experience of Selected Developing Countrie s', pages 6 -10.  
6 UNCTADStat.  
7 Source https://unctad.org/tdr2022 . 
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  important for investment in manufacturing in countries at intermediate stages of industrialization. 
Most industries of developing countries that are linked to international production networks have 
high import content in technology -intensive parts and components while their domestic value -added 
mainly consists of wages paid to local wo rkers. Raising domestic content would constitute an 
important step in industrial upgrading and improve the balance of payments.8 In resource rich 
developing or least -developed countries (LDCs), restrictions over domestic content requirements 
can reinforce  the 'resource curse syndrome ' as the country wants to nourish resource -based 
industries, to enhance technology utilized by local firms and establish backward and forward linkages 
among them.9  
1.7.  More recently in the context of the polycrisis, governments i n many developed economies have 
been implementing industrial policies and measures that would qualify as investment -related trade 
measures in the name of addressing inflation or the needed transformation to respond to the climate 
crisis.  
1.8.  Africa has massiv e untapped capacity that can be unlocked to benefit the global community in 
its collective effort to address the climate crisis. For instance, the global energy transition to achieve 
net-zero emission by 2050 as provided in the UNFCCC Paris Agreement creat es opportunities for 
Africa. Between 2010 and 2020, the installed capacity of bioenergy, solar and wind power increased 
in middle and low -income countries, accounting for over 50 per cent of total installed capacity. Given 
its natural endowment, Africa pos sesses the world 's largest potential capacity of renewable energy 
production, estimated to reach 310GW by 2030.10 Yet, Africa 's share in the world 's renewable energy 
production capacity in 2022 remained only 2 per cent (Figure 6).  
Figure 6: Distribution o f world renewable energy production capacity by region (2022, per 
cent)  
 
 
Source: IRENA renewable energy highlights, March 2023 .  
 
 
1.9.  This paper reviews how the TRIMs Agreement has been applied and proposes how its rules 
could be adap ted in order to address the current and future challenges that developing countries 
and LDCs face in the context of the polycrisis and the needed transformation to build resilience and 
to address developmental, industrialization, digital transformation and  climatic challenges. This 
paper should be read together with the African Group paper entitled 'A Case for Rebalancing the 
Agreement on Subsidies and Countervailing Measures ' (WT/GC/W/880 G/SCM/W/589 
WT/COMTD/W/274) and the submission entitled 'Policy spac e for industrial development - a case for 
rebalancing trade rules to promote industrialisation and to address emerging challenges such as 
 
8 Montes and Mohamadieh, 'Throwing Away Industrial Development Tools: Investment Protection 
Treaties and Performance Requirements '. In South Centre, Investment Treaties: Views and Experiences from 
Developing Countries. Available at: https://www.southcentre. int/wp -
content/uploads/2016/05/Bk_2015_Investment -Treaties_EN.pdf  
9 Ibid, Montes and Mohamadieh . 
10 UNCTAD (2023), Technology and Innovation Report 2023: Opening green windows - Technological 
opportunities for a low -carbon world . 
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  climate change, concentration of production and digital industrialisation ' (WT/GC/W/868, 
G/C/W/825, WT/COMTD/W/270, IP /C/W/695, WT/WGTTT/W/33).  
2  ISSUES TO CONSIDER FROM THE EXISTING WTO JURISPRUDENCE PERTAINING TO 
TRIMS AGREEMENT  
2.1.  By 2015, 41 dispute settlement proceedings had been initiated that included a claim under the 
TRIMs Agreement. Of these 41 proceedings, 27 involved a developing country Member as a 
respondent, and 25 out of 27 included an allegation relating to local conte nt. This shows that a 
number of developing countries still require flexibility to use local content requirements to promote 
upstream and downstream linkages within the local economy and achieve industrialization and 
structural transformation. Between 2015 and 2022, 6 dispute settlement cases included a claim 
under the TRIMs Agreement. Disputes pertaining to subsidies for renewable energy raised since 
2010 involved local content requirements that were challenged under Article III of GATT 1994, under 
the TRIM s agreement, and under the Agreement on Subsidies and Countervailing Measures (ASCM).  
2.2.  The jurisprudence confirmed that the TRIMs Agreement is a clarification of the application of 
Articles III and XI of the GATT 1994 to TRIMs.11 Yet, the TRIMs  Agreement is not just a corollary of 
Articles III and XI of GATT 1994,12 even if one of these provisions were not applicable, the other 
would remain applicable. For example, some measures (e.g. TRIMs) that do not directly regulate 
goods, or the importatio n of goods (such as restrictions imposed on investors, wholesalers, and 
manufacturers, as well as on points of sale and ports of entry) have been found to be inconsistent 
with Article III:4 or Article XI:1 of GATT 1994.13 
2.3.  The scope of measures that could f all under the disciplines of the TRIMs Agreement has been 
left undefined. The characterization of the measures as 'investment measures' depends on an 
examination of the manner in which the measures at issue relate to investment '.14 The list of 
prohibited T RIMs annexed to the Agreement is illustrative not exhaustive; it does not give legal 
clarity on the types of measures prohibited. The TRIMs Agreement does not include an objective test 
for identifying when such measures may be deemed inconsistent with the Agreement. It thus leaves 
ample room for interpreting which other TRIMs not included in the list constitute 'trade related 
investment measures ' prohibited by the Agreement.15 The Agreement does not define whether the 
TRIMs included in the illustrative list  are prohibited per se  or subject to the determination of 
inconsistency with Articles III and XI of the GATT 1994. Yet, a panel found that TRIMs falling under 
paragraph 1(a) of the TRIMs Illustrative list 'are necessarily inconsistent with Article III:4 of  the 
GATT 1994, thus obviating the need for separate and additional examination of the legal elements 
of Article III:4 of the GATT 1994 '.16 
2.4.  Measures covered under the Agreement could relate to any enterprise, domestic or foreign. 
According to the panel in Indonesia - Autos , 'nothing in the TRIMs Agreement suggests that the 
nationality of the ownership of enterprises subject to a particular measure is an element in deciding 
whether that measure is covered by the Agreement '.17 For example, measures relating to  internal 
taxes or subsidies were found to fall under the scope of the Agreement as they are one of many 
types of advantages which may be tied to a local content requirement. The latter is a principal focus 
of the TRIMs Agreement and compliance with which may be encouraged through providing any type 
of advantage.18 Furthermore, the panel in India-Solar Cells  found that 'the wording of the illustrative 
 
11 Appellate Body Reports,  Canada – Renewable Energy / Feed -In Tariff Program, paras. 5.19 -5.33. See 
also Panel Report, EC – Bananas III, paras. 7.185 -7.186.  
12 Indonesia - Autos case, panel report WT/DS 54, 55, 59 64/R adopted on 23.7.98, paras: 14.60, 14.61, 
14.62, and 14.63. Cited  in  
Correa, C.M. and Kumar, N., 2003.  Protecting foreign investment: implications of a WTO regime and 
policy options , pages: 74 -75. Zed Books.   
13 Appellate Body Report, China – Publications and Audio -visual  Products, para. 227, where the 
Appellate Body referred to the Illustrative List in the Annex to the TRIMs Agreement.  
14 Panel Report, Indonesia – Autos, paras. 14.80 -14.81 . 
15 Supra n. 10, Correa and Kumar (2004).  
16 Panel Report, India – Solar Cells, paras.  7.47-7.54. The defendant had argued that where a TRIM falls 
within the terms of the Illustrative List, it must still be demonstrated that the measure accords 'less favourable 
treatment ' within the meaning of Article III:4 of the GATT 1994 in order to find  a violation of Article 2.1 of the 
TRIMs Agreement . 
17 Panel Report, Indonesia – Autos, para. 14.73.  
18 The panel in Indonesia -Autos found no reason why an 'internal measure would necessarily not govern 
the treatment of foreign investment '. See: Panel Report, Indonesia – Autos, para. 14.73.  WT/GC/W/896 • G/TRIMS/W/173 • WT/COMTD/W/284  
 
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  list of the TRIMs Agreement makes it clear that a simple advantage conditional on the use of 
domestic goods  is considered to be a violation of Article 2 of the TRIMs Agreement even if the local 
content requirement is not binding as such '.19 
2.5.  Examples of measures considered to constitute 'investment measures ' as per the TRIMs 
Agreement include measures to encoura ge investment in the local production of equipment 
associated with renewable energy,20 measures pursued for the promotion and development of 
specific industries with explicit reference to investment -related implications,21 and measures dealing 
with researc h, development and production found to 'have an impact on trade, by affecting the sale 
and purchase of imported products, including the inputs used in the production of incentivized 
finished and intermediate products '.22  
2.6.  These cases indicate the extensive  nature of some of the conclusions by WTO adjudicative 
bodies. The impact is to create uncertainty for policy formulation by developing countries in support 
of their industrial development and related investments, and in relation to flexibilities that are 
available under the Agreement.  
3  RELEVANCE AND EFFECTIVENESS OF TRIMS RULES FROM A DEVELOPMENTAL 
PERSPECTIVE  
3.1.  The initial design of the TRIMs Agreement attempted to account for the potential developmental 
implications on developing countries. Yet, the way th e relevant provisions have been designed and 
applied fell short of effectively addressing the developmental concerns and preserving the policy 
space necessary for the realization of legitimate development goals.  
3.2.  For example, Article 4 of the  TRIMs Agreemen t recognizes that developing countries might 
need to adopt measures that are crucial to foster and facilitate their development strategies, and 
accordingly that they must be free to adopt such measures even when they would be inconsistent 
with WTO obligati ons. However, benefiting from the envisioned flexibility requires fulfilling a complex 
and burdensome set of requirements and eligibility conditions (under Article XVIII GATT, the 
understanding on Balance of Payments provisions, and the Declaration on Trad e Measures taken for 
Balance of Payment purposes), which makes access to this flexibility almost impossible.23 
3.3.  Article 5.3 allowed developing and least developed countries to request a one -time extension 
of the transition period for the elimination of TRIM s notified. To get this extension, the requesting 
member had to demonstrate particular difficulties in implementing the provisions of the TRIMs 
Agreement. Most developing countries have not notified any TRIMs, which could be partially 
explained by the lack  of measures in place at the time of negotiating the agreement. Several 
developing countries that notified TRIMs had requested transitions under Article 5.3 TRIMs24, yet 
Article 5.3 is currently obsolete.  
3.4.  Given the importance of investment -related measure s for their developmental and 
industrialization policies, developing countries requested the review of flexibilities under the TRIMs 
Agreement, under the mandates pertaining to 'implementation -related issues and concerns ' 
(para.  12 of WT/MIN(01)/DEC/1) and  strengthening and making special and differential treatment 
more precise and operational (para. 44 of WT/MIN(01)/DEC/1).25  
 
19 Panel Report, Indonesia – Autos, paras. 14.88 -14.91 . 
20 See: Panel Reports, Canada – Renewable Energy / Feed -In Tariff Program, paras. 7.109 -7.110 . 
21 Panel Report, India – Solar Cells, para. 7.60.  
22 Panel Report, Brazil – Taxation, para. 7.360.  
23South Centre (2002), 'Review of the Existing Special and Differential Treatment Provisions: 
Implementing the Doha Mandate '. 
24 Ten developing country Members r equested extensions of the transition period pursuant to Article 
5.3. On 31 July 2001, eight developing country Members were granted extensions of the transition period to 
eliminate TRIMs through end -2003. The extensions were provided through decisions of the Council for Trade in 
Goods under Article 5.3 in seven of the eight cases (see G/L/460 -466 and G/L/497 -504), and in the other case 
through a waiver under Article IX of the WTO Agreement (see WT/L/410). See also Argentina (G/C/W/295), 
Colombia (G/C/W/296 ), Malaysia (G/C/W/291/Rev.2), Mexico (G/C/W/293), Pakistan (G/C/W/294), Philippines 
(G/C/W/289), Romania (G/C/W/290), Thailand (G/C/W/292).  
25 For example, see  : JOB(01)/152/Rev.1 , WT/MIN(01)/17 , TN/CTD/W/28,  G/TRIMS/W/25, 
G/TRIMS/M/31, TN/CTD/W/3/Rev.2, JOB/DEV/65 , JOB/TNC/97  WT/GC/W/896 • G/TRIMS/W/173 • W T/COMTD/W/284  
 
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4  THE SIGNIFICANCE OF TRIMS IN SUPPORTING AND BOLSTERING THE PROCESS OF 
INDUSTRIALIZATION:  
4.1.  Attracting foreign direct investment (FDI):  TRIMs can indirectly foster or attract FDI  by creating 
a more favourable investment environment. One of the primary objectives of developing and least 
developed countries is to attract FDI, as it plays a vital role in promoting industrialization. This could 
be demonstrated in the potential develop mental benefits of export -performance. TRIMs, particularly 
when they are used to create a favourable environment for a specific industry can attract 
investments to establish world -scale production within a host country for an industry that exhibits 
increas ing returns to scale. In this regard, export -performance TRIMs, including trade -balancing 
requirements, could be used to incentivize and promote production within the host country, therefore 
attracting FDIs.  
4.2.  Encouraging local entrepreneurship : TRIMs could  also support industrialization by fostering the 
growth of local entrepreneurship and MSMEs. Governments can implement measures that incentivize 
domestic businesses, enabling the expansion of domestic markets. For example, TRIMs can provide 
support to loca lly-owned enterprises in the form of subsidies and low -interest loans to domestic 
entrepreneurs. These measures promote the development of local industries, encourage innovation, 
build backward linkages and create job opportunities, thereby contributing to  industrialization.  
4.3.  Technology transfer and knowledge spillovers : Industrialization requires the adoption and 
diffusion of advanced technologies. TRIMs can play a crucial role in facilitating technology diffusion 
and eventual indigenous technology developm ent . When multinational corporations invest in a 
country, they often bring along advanced production techniques, machinery, and know -how. This 
facilitates technology transfer and integration of new and advanced production methods enabling 
local firms to a dvance their positions in the domestic, regional and global market. Additionally, when 
foreign companies operate in a host country, knowledge spillovers can occur, as local firms can learn 
from their practices and technologies, further contributing to indu strial development.  
4.4.  Building industrial infrastructure : TRIMs can be instrumental in encouraging the development 
of essential industrial infrastructure. Governments can use these measures to attract investment in 
infrastructure projects such as roads, port s, power plants, and industrial parks. By offering incentives 
and ensuring a conducive business environment, TRIMs can stimulate private investment in 
infrastructure development, which is crucial for supporting industrial activities and realization of the 
SDGs. Reliable infrastructure enables efficient transportation of goods, reduces production costs, 
and improves access to markets, thereby enhancing industrial competitiveness.  
4.5.  Job creation and economic growth : Industrialization supported by TRIMs can lead  to substantial 
job creation and economic growth. The establishment of new industries and the expansion of existing 
ones generate employment opportunities across various sectors, lifting people out of poverty and 
improving living standards. Industrializati on also contributes to economic growth by increasing 
productivity, diversifying the economy, and boosting exports. The revenue generated from industrial 
activities can be reinvested in education, healthcare, and social welfare programs, fostering overall 
socio-economic development.  
5  ADAPTING THE TRIMS AGREEMENT RULES TO ENABLE INDUSTRIALIZATION AND 
STRUCTURAL TRANSFORMATION  
5.1.  The African Group underlined the importance of adapting the rules to allow Members the policy 
space to undertake measures that Members c hoose in order to achieve legitimate policy ends 
including incentivizing the strategic development and maintenance of domestic and regional 
capacities and advancing on achieving their industrial diversification, climate goals and digital 
transformation.26 Measures are also needed to contribute to enhancing resilience in supply chains, 
as many firms consider the value of producing goods and services closer to markets, based on 
lessons from the implications of the recently lived crises on global logistics and  supply costs.  
 
26 See: WT/GC/W/868 . WT/GC/W/896 • G/TRIMS/W/173 • WT/COMTD/W/284  
 
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  5.2.  For those purposes, the TRIMs Agreement and related GATT provisions should be adapted to 
contribute to industrialisation and structural transformation. The following is proposed:  
1. Provide a flexibility under the TRIMs Agreement to allow deve loping countries policy space 
and tools in support of their developmental policies.  
 
2. Implement measures to ameliorate their foreign exchange challenges. This exception should 
be availed to those countries that are facing balance of payments challenges.  
 
3. Provide for an exemption from the TRIMs Agreement together with Articles III and XI GATT, 
and the obligations under the ASCM to the extent they apply to the concerned measure for 
local content requirements and similar TRIMs undertaken to address specific ob jectives 
aligned with the climate response and the 'nationally determined contributions ' under the 
Paris Agreement and targeted at averting balance of payment crisis.  
 
4. Consider a threshold that can be applied to local content requirements to facilitate 
industrialisation and structural transformation. The threshold aims to ensure a balance 
between advancing the trade and investment objectives. As such Members would be allowed 
to impose up to [x]% of local content requirements to boost domestic production.  
 
5. Consider a specific flexibility that would extend to cover situations of crises, including, but 
not limited to, climatic and natural disasters, financial and economic crises, health 
emergencies, food -security related crises, and similar crises.  
 
6. TRIMs take n by LDCs shall be given an exemption under the TRIMs Agreement together with 
Articles III and XI of the GATT, and the obligations under the ASCM to the extent they apply 
to the concerned measure, which extends for as long as the country is an LDC.  
 
6  CONCL USION  
6.1.  Developing countries face unique challenges in implementing the TRIMs Agreement, including 
limited resources, technological gaps, capacity constraints, and the need for policy flexibility to 
promote industrialization and structural transformation. It  is crucial to evaluate how TRIMs impact 
sustainable development in the developing and least developed countries, particularly in areas like 
advancing renewable energy, technology development and transfer, digital transformation, and 
building resilient sup ply chains.  
6.2.  Analysing whether the TRIMs Agreement hinders or supports industrialization and sustainable 
development strategies is essential. Striking a balance between trade liberalization and supporting 
economic development is of utmost importance, consi dering the potential tensions between TRIMs 
obligations and the development priorities of developing countries. Flexibility and tailored 
approaches are necessary to address these challenges. Assessing the outcomes of TRIMs -related 
dispute settlement cases and their influence on interpretation and implementation is critical, while 
identifying any limitations or gaps in addressing the concerns of developing countries within the 
jurisprudence.  
6.3.  To alleviate these challenges, policy recommendations should focus on promoting policy 
coherence in support of sustainable development, capacity building, technical assistance, technology 
transfer, and ensuring a fair interpretation of the agreement.  
__________  