RESTRICTED
WORLD TRADE G/TRIMS/M/4
2May1996
ORGANIZATION(96-1691)
Committee onTrade-Related Investment Measures
MINUTES OFTHE MEETING HELD ON18MARCH 1996
Chairman: Mr.Vassili Notis (Greece)
1. TheCommitteeonTrade-RelatedInvestmentMeasureshelditsfourthmeetingon18March1996.
2. TheCommittee adopted thefollowing agenda:
A. NotificationsunderArticle5.1oftheAgreementonTrade-RelatedInvestmentMeasures
B. Procedures forNotifications under Article 6.2oftheAgreement
C. Other Business:
(i) Notifications under Article 5.5
(ii) Derestriction ofCommittee Documents
(iii) Preparation ofAnnual Report 1996
D. Election ofOfficers
A. NOTIFICATIONS UNDER ARTICLE 5.1OFTHEAGREEMENT ONTRADE-RELATED
INVESTMENT MEASURES
3. TheChairman recalled that,attheprevious meeting oftheCommittee, comments hadbeen
made ontheconsequences ofthelatesubmission ofsome notifications made under Article 5.1,questions
ofafactual nature hadbeenraised regarding certain notifications, andithadbeennoted thatinsome
casesthenotifications werenotinconformity withtheagreed standard format indocument G/TRIMS/1.
Since thatmeeting, theCommittee hadreceived supplementary notifications fromIndia1andMalaysia2
andnewnotifications from Chile3andSaint Lucia.4
4. Therepresentative ofIndia informed theCommittee thatinitem(i)onpage3ofdocument
G/TRIMS/N/1/IND/1/Add.1 "Annexure III"should read"Annexure II".
1G/TRIMS/N/1/IND/1/Add.1 andCorr.1
2G/TRIMS/N/1/MYS/1/Rev.1
3G/TRIMS/N/1/CHL/1
4G/TRIMS/N/1/LCA/1G/TRIMS/M/4
Page2
5. Therepresentative ofJapan drew theCommittee 'sattention tomeasures taken byArgentina
intheautomotive sector under Presidential Decree no.396adopted on18January 1996. ThisDecree
changed theformula forthecalculation oflocal content andraised therequired local content ratio
to67.5percentin1999. Thisincrease wasinconflict withtherequirements ofArticle 5.4ofthe
TRIMs Agreement. Heasked whether thedelegation ofArgentina could confirm hisdelegation 's
understanding thattheincentive linked tothelocalcontent measure -theimportation ofpartsatreduced
tariff rates-would beeliminated bytheyear1999. Hisdelegation wasalsointerested inknowing
whattypes ofmeasure Argentina intended toapply intheautomotive sector aftertheyear2000. He
added thatbarriers tonon-members should notbeenhanced because ofregional integration.
6. Therepresentative oftheEuropean Communities expressed hisdelegation 'sconcerns ontwo
points. First, while therecent notifications byIndiaandMalaysia supplemented previous submissions,
therewerealsonewnotifications which hadbeensubmitted wellaftertheexpiry ofthedeadline. These
latter notifications, including thenotification byColombia indocument G/TRIMS/N/1/COL/2, were
without legal validity. Secondly, Argentina andIndonesia hadrecently introduced certain changes
tomeasurespreviouslynotifiedunderArticle5.1whichwerecontrarytotherequirementsofArticle5.4
oftheAgreement.
7. Therepresentative ofCanada agreed withtherepresentative oftheEuropean Communities
thatthedeadline forsubmission ofnotifications under Article 5.1hadpassed. Henoted inparticular
thelateness ofthenotification submitted byColombia. Inregard tothesupplementary notifications
submitted byIndia andMalaysia, herequested thatthedelegations inquestion explain thesubstantive
changes inthesenotifications compared withtheprevious notifications. Healsorequested thedelegation
ofArgentina toexplain therecent changes intheArgentine automotive regime.
8. Therepresentative ofChile saidthatthedelay inthenotification byhiscountry wastheresult
oftechnical problems. However, therelevant legislation pertaining tomeasures intheautomotive
sector hadalready beennotified under theAgreement onSubsidies andCountervailing Measures at
thebeginning of1995, wellwithin thetimelimitprescribed bythatAgreement, which showed that
hisauthorities hadacted ingood faithandhadensured transparency inthismatter. Henoted thatthe
debate atprevious Committee meetings onthelegalimplications oflatesubmission ofnotifications
under Article 5.1hadrevealed thatthere wasnoconsensus onthisquestion.
9. Therepresentative ofNewZealand shared theconcerns expressed bytherepresentatives of
theEuropean Communities andCanada onthelateness ofsome notifications. Inaddition, insome
cases theinformation provided inthenotifications wasincomplete. Withrespect tothesupplementary
notification submitted byIndia, sheasked whether therewereplans forthephase-out andelimination
ofthenotified measure. Inregard tothenotification submitted byColombia ofitsmeasures inthe
agricultural sector, sheasked foraclarification onthetiming oftheadoption ofthemeasures andon
plans fortheirphase-out andelimination. Shealsoreiterated herdelegation 'sinterest inreceiving
information onpoints raised attheprevious meeting inregard tothenotifications byPeruandIndonesia.
10. Therepresentative oftheUnited States agreed withthepoint made byother delegations that
notifications submitted afterthedeadline were without legal effect. Hisdelegation hadconcerns as
tothecompatibility withArticle 5.4ofthemeasures recently adopted byArgentina inregard to
automobiles andwasseeking further information onthese measures onabilateral basis.
11. TherepresentativeoftheUnitedStatesraisedconcernsinregardtothenotificationbyColombia
indocument G/TRIMS/N/1/COL/2. Themeasure notified byColombia required theproducers of
processed agricultural products tousecertain (unidentified) percentages oflocalcontent inorder to
obtain import licences forthose products. During theUruguay Round, asoutlined inArticle 4.2of
theAgreement onAgriculture, allparticipants, including Colombia, hadagreed totariffy theirnon-tariff
barriers, suchasimport licensing regimes. Thus, inthecaseofColombia, theUnited States andotherG/TRIMS/M/4
Page3
WTO Members hadagreed toallow Colombia toincrease itstariffs onanumber ofagricultural items.
Indeed, asadirect result, Colombia hadamong thehighest tariffs ofanycountry onmany agricultural
products. Thequidproquoforallowing Colombia toincrease these agricultural tariffs wasthe
elimination andremoval ofallnon-tariff barriers, including theonerous typeoflocalcontent licensing
regime reflected inG/TRIMS/N/1/COL/2. When itincreased itstariffs, Colombia hadnotindicated
atthetimethatitintended tomaintain theTRIMs. Onecould suppose thatunder thefootnote toArticle
4.2oftheAgreement onAgriculture Colombia could perhaps argue thatitcould maintain theimport
licensing TRIM, assuming thatithadtimely notified themeasure, which ithadnot.However, inlight
ofColombia 'sincrease inagricultural tariffs asaresult oftariffication, Colombia legally hadachoice.
Itcould either agree torollbackthehighagricultural tariffs topre-Uruguay Round levels oreliminate
theimport licensing TRIM foragricultural products. Nottodoeither wasclearly against thespirit,
ifnottheletter, oftheAgreement onAgriculture. However, Colombia hadnocover fortheseTRIMs
because ithadmissed the90-day deadline fornotifying itsmeasures. Theperiod of90daysforthe
submission ofanotification under Article 5.1hadstarted on30March 1995, when Colombia had
deposited itsinstruments ofratification. Thus, Colombia wasobliged tonotify itsTRIM by
30June1995. However, Colombia hadnotnotified thisTRIM until31July1995. Thus, Colombia
didnotbenefit from thetransition periods ofArticle 5oftheTRIMs Agreement. Hereserved his
delegation 'srights inthismatters.
12. Therepresentative ofColombia stated thatshehadtaken noteoftheconcerns raised byanumber
ofdelegations butthatitwastheposition ofherdelegation thatthemeasures notified in
G/TRIMS/N/1/COL/2 werecovered bytheAgreement. Thenotification hadbeensubmitted intime
insofarasithadbeenmade within aperiod of90daysfollowing theentry intoforce oftheWTO
Agreement forColombia. Inanyevent, some flexibility hadtobeshown regarding latenotifications,
especially from developing countries.
13. Therepresentative ofArgentina saidthathewould convey tohisauthorities thepoints raised
byanumber ofdelegations ontherecent measures taken byhiscountry intheautomotive sector.
Inrespect ofthenotification byColombia inG/TRIMS/N/1/COL/2, amatter alsodiscussed inthe
Committee onAgriculture, hestated thatitwasinconsistent withtheAgreement onAgriculture to
apply aTRIM inaddition totariffication. Hisdelegation would further examine theissueofthetiming
ofthisnotification. Referring toacomment made ontheabsence ofinformation inanotification on
plans tophase outnotified measures, heobserved thattheAgreement didnotrequire Members topresent
suchplans totheCommittee.
14. Therepresentative ofCanada requested that,atitsnextmeeting, theCommittee provide an
opportunity forathorough review ofColombia 'snotification ofitsagricultural measures.
15. Therepresentative ofJapan stated thatinDecember 1995 Brazil hadintroduced Provisional
Measure 1235 andOrdinance 1761 providing fortrade-balancing andlocalcontent requirements as
preconditions fortheimportation ofautomobile partsandfinished vehicles atreduced import dutyrates.
These measures constituted aviolation oftheWTO Agreements, particularly theTRIMs Agreement.
Asaresult ofadrastic increase intariff ratesintroduced inMarch 1995, imports offinished vehicles
hadvirtually ceased. InMay1995, Brazil hadsubmitted adocument (WT/L/66) toexplain thatthis
increase wasjustatemporary measure which would bereduced within amaximum period ofoneyear.
Sofar,however, theincreased tariff ratesremained inforce. Japan wasseriously concerned about
theadverse impact which these measures, taken byasimportant aMember asBrazil, would haveon
theTRIMs Agreement. Hereserved hisdelegation 'srights under allWTO Agreements.
16. Therepresentative ofKorea shared theconcerns expressed bytherepresentative ofJapan in
regard tothemeasures introduced inDecember 1995. Brazil 'snewregulations favoured domestically-
established producers byproviding them withtariff reductions oncapital goods andinputs ifthey
complied withrequirements relating tothevalue ofexports anddomestic purchases. These measuresG/TRIMS/M/4
Page4
werecovered byAnnex totheTRIMs Agreement andweretherefore inclear violation ofArticle 2
oftheAgreement. Although Korea understood Brazil 'ssituation vis-à-vis itsMercosur partners, it
didnotagree withtheargument thatthese measures werejustifiable under Article 5.5oftheTRIMs
Agreement orunder Article XXIV ofGATT 1994. Itwastheconcern ofhisdelegation that,ifthe
Brazilian measure wereleftunchallenged, many other countries would follow suit. Hereserved his
delegation 'srights topursue thismatter inother venues asappropriate.
17. Therepresentative ofCanada saidthatthemeasures adopted byBrazil wereinconsistent with
various provisions oftheTRIMs Agreement anddidnotqualify fornotification under Article 5.1or
fortreatment under Article 4.Hereserved hisdelegation 'srights onthisissue.
18. Therepresentative oftheUnited States saidthatthere appeared tobenodispute thatBrazil 's
measures wereinviolation oftheTRIMs Agreement. Hisauthorities hadnotyethadanopportunity
tostudy thewaiver request recently submitted byBrazil inrespect ofthese measures, norhadthey
received and/or analysed answers todetailed questions which theyhadposed toBrazil aswellasto
Argentina concerning anumber offactsrelating tothisrequest. Hisdelegation looked forward to
discussing thisissuedirectly withBrazil andother WTO Members afterexamining inmore detail the
Brazilian waiver request.
19. Therepresentative oftheEuropean Communities stated thatthemeasures taken byBrazil were
clearly notcovered bytheTRIMs Agreement. Hisdelegation would carefully consider thewaiver
request recently submitted byBrazil inrelation tothese measures.
20. Therepresentative ofBrazil informed theCommittee thathisdelegation hadveryrecently
submitted awaiver request under Article IX:3(b)oftheWTO Agreement concerning themeasures
intheautomotive sector. Thismatter would bediscussed attheappropriate timeintheCouncil for
Trade inGoods.
21. Therepresentative oftheEuropean Communities asked thedelegation ofIndonesia toprovide
information onchanges introduced on28February toitsmeasures intheautomotive sector andtoexplain
howIndonesia intended tojustify these measures.
22. Therepresentative ofIndonesia replied thathisdelegation hadnotyetreceived information
onthedecree adopted attheendofFebruary. Hewould convey therequest bytherepresentative of
theEuropean Communities tohisauthorities andprovide information assoonaspossible.
23. Therepresentative oftheUnited States stated thatnewregulations recently enacted byIndonesia
withrespect toitsautoinvestment regime raised concerns. Among thenewmeasures wasthecreation
ofso-called "pioneer automobile companies". Companies would begranted "pioneer company status"
ifthey: (1)were100percentIndonesian owned; (2)manufactured andmarketed carswithunique
Indonesian names; (3)usedatleast60percentlocalcontent within three years; (4)moved towards
useofIndonesian-owned andbased design andtechnical firms; and(5)received presidential approval.
Under thenewmeasures, automobiles soldbypioneer companies forthefirstthree years would not
besubject toaluxury taxofbetween 20-35 percent. Automobiles soldbynon-pioneer companies
would notreceive acomplete waiver oftheluxury taxunless theycontained atleast60percentlocal
content. Inaddition, autopartsimported bypioneer companies forinput intoautos manufactured in
Indonesia would beexempt from duties forthree years. Non-pioneer companies manufacturing in
Indonesia would notbeexempt frompaying duties forimported automobile parts. Hisauthorities would
shortly complete adetailed legalanalysis oftheextent towhich thenewregulations wereinconsistent
withtheTRIMs Agreement, among other WTO rules. Theresults would becommunicated directly
totheIndonesian Government assoonasthisanalysis wascompleted. Heconcluded byemphasizing
theconcern ofhisauthorities about theconsistency ofthese measures withWTO rules, including the
TRIMs Agreement.G/TRIMS/M/4
Page5
24. Therepresentative ofJapan expressed hisdelegation 'sconcerns regarding themeasures recently
adopted byIndonesia inregard toautomobiles, which measures might beinconsistent withtheWTO
Agreement, particularly Article 3ofGATT 1994.
25. TheCommittee tooknoteofthestatements made andagreed torevert atitsnextmeeting to
notifications under Article 5.1.Itwasalsoagreed thattheSecretariat would draw theattention ofthe
delegation ofMalaysia, which wasnotpresent atthemeeting, totherequest bytherepresentative of
Canada foranexplanation ofthedifferences between Malaysia 'srecent notification anditsearlier
notification under Article 5.1
B. PROCEDURES FOR NOTIFICATIONS UNDER ARTICLE 6.2OFTHE AGREEMENT
26. TheChairman recalled thattheCommittee had,atitsthree previous meetings, discussed the
issueofhowbesttoimplement thenotification requirement ofArticle 6.2.Asagreed atthelastmeeting,
theSecretariat hadrecently submitted aninformal proposal onthismatter which appeared inanon-paper
dated 26February 1996. Bywayofintroducing thenon-paper, theChairman drew theCommittee 's
attention tothepoints made inparagraph 3which highlighted thedistinction between notifications under
Article 6.2andnotifications under other provisions oftheTRIMs Agreement. Article 6.2envisaged
thenotification ofpublications, rather thanoflaws, regulations ormeasures; itapplied toallMembers
anditreferred toanyTRIM, whether ornotinconformity withArticles IIIandXIoftheGATT 1994.
Thekeyoperative partoftheproposal wasthesuggestion inparagraph 4thateachMember provide
theSecretariat withthenames ofpublications inwhich TRIMs might befound, andtheaddresses from
which copies ofsuchpublications could beobtained. Thus, itwasnotproposed thatMembers actually
submit copies ofpublications. Thisproposed manner ofimplementing Article 6.2would hopefully
dispel concerns raised atprevious meetings about theadministrative burden ofcomplying with
Article 6.2.Paragraph 4alsomade itclearthatnotifications ofpublications under Article 6.2would
bewithout prejudice tothelegalconsistency ofanyTRIMs which might befound inthesepublications.
Paragraph 5ofthenon-paper contained some suggestions astowhat kindofpublications might be
relevant forthepurposes ofArticle 6.2.Theproposal didnotattempt toresolve theproblem posed
bythelackofageneric definition intheAgreement ofwhat constituted a"trade-related investment
measure".
27. Anumber ofdelegations made comments ontheSecretariat 'sproposal. Itwasagreed toinsert
inthesecond lineofparagraph 4"where suchpublications exist" after"found" andtodelete inthe
fourth lineofparagraph 5"any" before "specific obligations".5Inview oftheinability ofthe
representative ofIndia toagree totheformal adoption oftheproposal without further instructions,
theCommittee agreed thattheproposal wasacceptable toalldelegations, except India which needed
further timetostudy it,andthatitwould beconsidered adopted bytheCommittee assoonasIndia
hadinformed theSecretariat thatitagreed totheproposal. Inthatcase,thedateinparagraph 6would
bethedatefourmonths afterthedateofcirculation ofthedecision. IfIndia didnotindicate its
acceptance oftheproposal, theCommittee would revert tothematter atitsnextmeeting.
5Therevised version oftheSecretariat non-paper isreproduced intheAnnex tothese minutes.G/TRIMS/M/4
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C. OTHER BUSINESS
(i) Notifications under Article 5.5oftheAgreement
28. TheChairman recalled that,atitsprevious meeting, theCommittee hadadopted astandard
format fornotifications under Article 5.5,subsequently circulated indocument G/TRIMS/3. Sofar
theCommittee hadnotreceived anynotifications under thisprovision.
29. TheCommittee tooknoteofthisinformation.
(ii) Derestriction ofdocuments
30. TheChairman noted thatnoagreement hadasyetemerged onthequestion ofcirculation and
derestriction ofWTO documents. Atthemeeting oftheGeneral Council held on13and
15December1995,theChairmanoftheCouncilhadstatedthatitwouldbereasonablefortheSecretariat
tocontinue toapply GATT 1947 document derestriction procedures toWTO documents, pending
agreement onnewprocedures.6Pursuant tothisstatement, theSecretariat would shortly circulate a
proposal forderestriction ofWTO documents, based onGATT 1947procedures. Delegations would
begiven aperiod of60daystorequest thatanydocument, orpartthereof, proposed forderestriction
remain restricted. Heemphasized thatthiswasessentially aninterim procedure, pending finalagreement
onWTO derestriction procedures.
31. TheCommittee tooknoteofthisstatement.
(iii) Annual Report totheCouncil forTrade inGoods for1996
32. TheChairman recalled that,atitsprevious meeting, theCommittee hadadopted itsannual
report under Article 7.3totheCouncil forTrade inGoods, based onadraftprepared bytheSecretariat.
Thisyear'sannual report hadtobeseeninthelightofthepreparation oftheMinisterial meeting in
Singapore. TheCouncil forTrade inGoods wasexpected toadopt itsreport totheGeneral Council
on29October, which would meeton7November toadopt itsreport totheMinisterial meeting. Against
thisbackground, theChairman proposed thattheCommittee authorize theSecretariat toprepare adraft
annual report tobecirculated priortothenextmeeting, scheduled for30September 1996. Inpreparing
thedraftreport, theSecretariat would takeintoaccount anyguidance which might beprovided by
theCouncil forTrade inGoods ortheGeneral Council onthepreparation ofsuchreports.
33. Itwassodecided.
D. ELECTION OFOFFICERS
34. TheCommittee elected Mr.Vassili Notis (Greece) asChairman andMr.Javier Paulinich (Peru)
asVice-Chairman.
DATE OFNEXT MEETING
35. TheCommittee decided toholditsnextmeeting on30September 1996.
6WT/GC/M/9G/TRIMS/M/4
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ANNEX
PROCEDURES FOR NOTIFICATIONS UNDER ARTICLE 6.2
OFTHE TRIMS AGREEMENT
Non-paper bytheSecretariat
Revision
1. Atitsmeeting of19October 1995, theCommittee onTrade-Related Investment Measures
requested theSecretariat toprepare aspecific proposal ontheimplementation ofArticle 6.2ofthe
TRIMs Agreement (G/TRIMS/M/3, paragraph 29).
2. Article 6.2oftheTRIMs Agreement provides:
EachMember shallnotify theSecretariat ofthepublications inwhich TRIMs maybe
found, including thoseapplied byregional andlocalgovernments andauthorities within
theirterritories.
3. Itwillbenoted thatthisprovision doesnotenvisage notification ofparticular laws, regulations
ormeasures butofpublications, thatitapplies toallWTO Members, andthatitcovers alllevels of
government. Itwillalsobenoted thatArticle 6.2refers toanyTRIM, whether ornotinconformity
withArticles IIIandXIoftheGATT 1994.
4. Itissuggested thattheCommittee decide thateachMember implement Article 6.2byproviding
theSecretariat withthename(s) ofpublication(s) inwhich TRIMs maybefound, where suchpublications
exist, including those applied byregional andlocalgovernments andauthorities within theirterritories,
andtheaddresses from which copies canbeobtained. Under thisproposal, Members would notbe
expected tosubmit copies ofsuchpublications totheTRIMs Committee. Thenotification would be
without prejudice tothelegalconsistency ofanyTRIMs which maybefound inthese publications
notified.
5. Itissubmitted thatthe"publications", notification ofwhich isenvisaged under Article 6.2,
areofficial sources which would contain relevant laws, regulations ormeasures ofmore specific
character. Suchsources mayinclude official gazettes, butitmight bemore helpful ifMembers included
references tospecific publications ofrelevant agencies (e.g.bulletins orperiodicals ofarelevant ministry
orforeign investment board).
6. Ifthissuggested procedure isacceptable toMembers, theSecretariat would issueaninvitation
toMembers tosubmit theirlistsofpublications byacertain date,say1July1996, andtoupdate these
listsasappropriate.TheSecretariatwouldconsolidatenotificationsunderArticle6.2inasingledocument
which would beupdated astheneedarises.