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I. Preamble back to top
A. Text of the Preamble
Members,
Considering that Ministers agreed in the Punta
del Este Declaration that “Following an examination of the operation
of GATT Articles related to the trade restrictive and distorting effects
of investment measures, negotiations should elaborate, as appropriate,
further provisions that may be necessary to avoid such adverse effects
on trade”;
Desiring to promote the expansion and
progressive liberalisation of world trade and to facilitate investment
across international frontiers so as to increase the economic growth of
all trading partners, particularly developing country Members, while
ensuring free competition;
Taking into account the particular trade,
development and financial needs of developing country Members,
particularly those of the least-developed country Members;
Recognizing that certain investment measures
can cause trade-restrictive and distorting effects;
Hereby agree as follows:
B. Interpretation and Application of the Preamble
No jurisprudence or decision of a competent
WTO body.
II. Article 1
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A. Text of Article 1
Article 1: Coverage
This Agreement applies to investment measures
related to trade in goods only (referred to in this Agreement as “TRIMs”).
B. Interpretation and Application of Article 1
1. “Investment measures”
1. In Indonesia
— Autos, the Panel examined
the consistency of an Indonesian subsidy programme with the TRIMs
Agreement. Indonesia, arguing that the measures at issue were not
trade-related investment measures, stated that while its subsidies may,
at times, indirectly affect investment decisions of the recipient of the
subsidy or other parties, these decisions are not the object, but rather
the unintended result, of the subsidy. Also, Indonesia argued that the
TRIMs Agreement is basically designed to govern and provide a level
playing field for foreign investment, and that therefore measures
relating to internal taxes or subsidies cannot be trade-related
investment measures. The Panel rejected this view, stating that the term
“investment measures” was not limited to measures applying
specifically to foreign investment:
“We note that the use of the broad term ‘investment
measures’ indicates that the TRIMs Agreement is not limited to
measures taken specifically in regard to foreign investment. … [N]othing
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. We therefore find
without textual support in the TRIMs Agreement the argument that since
the TRIMs Agreement is basically designed to govern and provide a level
playing field for foreign investment, measures relating to internal
taxes or subsidies cannot be construed to be a trade-related investment
measure. We recall in this context that internal tax advantages or
subsidies are only one of many types of advantages which may be tied to
a local content requirement which is a principal focus of the TRIMs
Agreement. The TRIMs Agreement is not concerned with subsidies and
internal taxes as such but rather with local content requirements,
compliance with which may be encouraged through providing any type of
advantage. Nor, in any case, do we see why an internal measure would
necessarily not govern the treatment of foreign investment.”(1)
2. In examining whether the measures in
question were “investment measures”, the Panel on Indonesia — Autos
reviewed the legislative provisions relating to these measures. The
Panel concluded that the measures were “aimed at encouraging the
development of a local manufacturing capability for finished motor
vehicles and parts and components in Indonesia” and that “that there
is nothing in the text of the TRIMs Agreement to suggest that a measure
is not an investment measure simply on the grounds that a Member does
not characterize the measure as such, or on the grounds that the measure
is not explicitly adopted as an investment regulation”:
“On the basis of our reading of these
measures applied by Indonesia under the 1993 and the 1996 car programmes,
which have investment objectives and investment features and which refer
to investment programmes, we find that these measures are aimed at
encouraging the development of a local manufacturing capability for
finished motor vehicles and parts and components in Indonesia. Inherent
to this objective is that these measures necessarily have a significant
impact on investment in these sectors. For this reason, we consider that
these measures fall within any reasonable interpretation of the term ‘investment
measures’. We do not intend to provide an overall definition of what
constitutes an investment measure. We emphasize that our
characterization of the measures as ‘investment measures’ is based
on an examination of the manner in which the measures at issue in this
case relate to investment. There may be other measures which qualify as
investment measures within the meaning of the TRIMs Agreement because
they relate to investment in a different manner.
With respect to the arguments of Indonesia
that the measures at issue are not investment measures because the
Indonesian Government does not regard the programmes as investment
programmes and because the measures have not been adopted by the
authorities responsible for investment policy, we believe that there is
nothing in the text of the TRIMs Agreement to suggest that a measure is
not an investment measure simply on the grounds that a Member does not
characterize the measure as such, or on the grounds that the measure is
not explicitly adopted as an investment regulation. In any event, we
note that some of the regulations and decisions adopted pursuant to
these car programmes were adopted by investment bodies.”(2)
2. “related to trade”
3. In examining whether the measures at issue
in the dispute before it were “trade-related”, the Panel on
Indonesia — Autos held that local content requirements were necessarily
trade-related:
“[I]f these measures are local content
requirements, they would necessarily be ‘trade-related’ because such
requirements, by definition, always favour the use of domestic products
over imported products, and therefore affect trade.
An examination of whether these measures are
covered by Item (1) of the Illustrative List of TRIMs annexed to the
TRIMs Agreement, which refers amongst other situations to measures with
local content requirements, will not only indicate whether they are
trade-related but also whether they are inconsistent with Article III:4
and thus in violation of Article 2.1 of the TRIMs
Agreement.”(3)
3. Necessity of separate analysis on whether a
measure is a trade-related investment measure
4. In Indonesia
— Autos, the Panel noted that
differing views had been expressed by the parties to that dispute on the
question “whether any requirement by an enterprise to purchase or use
a domestic product in order to obtain an advantage, by definition falls
within the Illustrative List or whether the TRIMs Agreement requires a
separate analysis of the nature of a measure as a trade-related
investment measure before proceeding to an examination of whether the
measure is covered by the Illustrative List.”(4) The Panel considered
that it was not necessary for it to decide this question, and noted in
this regard:
“[I]f we were to consider that the measures
in dispute in this case are in any event trade-related investment
measures, it would not be necessary to decide this basic issue of
interpretation. We note in this regard that the United States and the
European Communities have also argued in the alternative that, even if
it is necessary to show a relationship of a measure to investment, any
such requirement would be satisfied in the case under consideration.
Therefore, we will first determine whether the
Indonesian measures are TRIMs. To this end, we address initially the
issue of whether the measures at issue are ‘investment measures’.
Next, we consider whether they are ‘trade-related’. Finally, we
shall examine whether any measure found to be a TRIM is inconsistent
with the provisions of Article III and thus violates the TRIMs
Agreement.”(5)
III. Article 2
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A. Text of Article 2
Article 2: National Treatment and Quantitative
Restrictions
1. Without prejudice to other rights and
obligations under GATT 1994, no Member shall apply any TRIM that is
inconsistent with the provisions of Article III or
Article XI of GATT 1994.
2. An illustrative list of TRIMs that are
inconsistent with the obligation of national treatment provided for in
paragraph 4 of Article III of GATT 1994 and the obligation of general
elimination of quantitative restrictions provided for in paragraph 1 of
Article XI of GATT 1994 is contained in the Annex(6) to this Agreement.
B. Interpretation and application of Article 2
1. Illustrative List
(a) Paragraph 1(a)
5. The Panel on Indonesia
— Autos concluded
from its analysis of the measures in question that “under these
measures compliance with the provisions for the purchase and use of
particular products of domestic origin is necessary to obtain the tax
and customs duty benefits on these car programmes, as referred to in
Item 1(a) of the Illustrative List of TRIMs.”(7) The Panel then
concluded that the tax and customs duty benefits were “advantages”
within the meaning of the chapeau of paragraph 1 of the Illustrative
List:
“In the context of the claims under Article
III:4 of GATT, Indonesia has argued that the reduced customs duties are
not internal regulations and as such cannot be covered by the wording of
Article III:4. We do not consider that the matter before us in
connection with Indonesia’s obligations under the TRIMs Agreement is
the customs duty relief as such but rather the internal regulations,
i.e. the provisions on purchase and use of domestic products, compliance
with which is necessary to obtain an advantage, which advantage here is
the customs duty relief. The lower duty rates are clearly ‘advantages’
in the meaning of the chapeau of the Illustrative List to the TRIMs
Agreement and as such, we find that the Indonesian measures fall within
the scope of the Item 1 of the Illustrative List of TRIMs.
Indonesia also argues that the local content
requirements of its car programmes do not constitute classic local
content requirements within the meaning of the FIRA panel (which
involved a binding contract between the investor and the Government of
Canada) because they leave companies free to decide from which source to
purchase parts and components. We note that the Indonesian producers or
assemblers of motor vehicles (or motor vehicle parts) must satisfy the
local content targets of the relevant measures in order to take
advantage of the customs duty and tax benefits offered by the
Government. The wording of the Illustrative 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.
We note in addition that this argument has also been rejected in the
Panel Report on Parts and Components.(8)
We thus find that the tax and tariff benefits
contingent on meeting local requirements under these car programmes
constitute ‘advantages’.”(9)
6. In Canada
— Wheat Exports and Grain Imports
the question arose, whether Section 87 of the Canada Grain Act was an
investment measure inconsistent with Article 2.1 of the
TRIMs
Agreement.
With respect to this issue, the Panel made reference to its previous
findings(10) that the United States had not established that Section 87
is, as such, inconsistent with Article III:4 of the
GATT
1994. Since a
violation of Article III:4 of the
GATT 1994 was not established, the
Panel concluded that no inconsistency with Article 2.1 of the
TRIMs
Agreement could be found.
“The United States has not established that
Section 87 is inconsistent with Article III:4 of the GATT
1994. In view
of these findings, it is clear that, even if Section 87 could be
considered an investment measure related to trade in goods within the
meaning of the TRIMs Agreement, the United States has not established
that Section 87 is, as such, inconsistent with Article 2.1 of the
TRIMs
Agreement. Moreover, since the United States has not established that
Section 87 of the Canada Grain Act legally precludes producers of
foreign grain or foreign producers of grain from gaining access to
producer railway cars, the United States has also failed to establish
that Section 87 requires the use by an enterprise of products of
domestic origin or from any domestic source within the meaning of
paragraph 1(a) of the Annex to the TRIMs Agreement.”(11)
2. Relationship with GATT 1994
7. With respect to the relationship between
Article III.4 of the GATT 1994 and Article 2 of the
TRIMs
Agreement, see
paragraphs 25-36 below.
IV. Article 3
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A. Text of Article 3
Article 3: Exceptions
All exceptions under GATT 1994 shall apply, as
appropriate, to the provisions of this Agreement.
B. Interpretation and Application of Article 3
8. In Indonesia
— Autos, the Panel referred to
Article 3 in discussing the relationship between the TRIMs Agreement and
GATT 1994. See excerpts from the report of the Panel referenced in
paragraphs 28-30 below.
V. Article 4
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A. Text of Article 4
Article 4: Developing Country Members
A developing country Member shall be free to
deviate temporarily from the provisions of Article 2 to the extent and
in such a manner as Article XVIII of GATT
1994, the Understanding on the
Balance-of-Payments Provisions of GATT 1994, and the Declaration on
Trade Measures Taken for Balance-of-Payments Purposes adopted on 28
November 1979 (BISD 26S/205-209) permit the Member to deviate from the
provisions of Articles III and
XI of GATT 1994.
B. Interpretation and Application of Article 4
No jurisprudence or decision of a competent
WTO body.
VI. Article 5
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A. Text of Article 5
Article 5: Notification and Transitional Arrangements
1. Members, within 90 days of the date of
entry into force of the WTO Agreement, shall notify the Council for
Trade in Goods of all TRIMs they are applying that are not in conformity
with the provisions of this Agreement. Such TRIMs of general or specific
application shall be notified, along with their principal features.(1)
(footnote original )
1 In the case of TRIMs
applied under discretionary authority, each specific application shall
be notified. Information that would prejudice the legitimate commercial
interests of particular enterprises need not be disclosed.
2. Each Member shall eliminate all TRIMs which
are notified under paragraph 1 within two years of the date of entry
into force of the WTO Agreement in the case of a developed country
Member, within five years in the case of a developing country Member,
and within seven years in the case of a least-developed country Member.
3. On request, the Council for Trade in Goods
may extend the transition period for the elimination of TRIMs notified
under paragraph 1 for a developing country Member, including a
least-developed country Member, which demonstrates particular
difficulties in implementing the provisions of this Agreement. In
considering such a request, the Council for Trade in Goods shall take
into account the individual development, financial and trade needs of
the Member in question.
4. During the transition period, a Member
shall not modify the terms of any TRIM which it notifies under paragraph
1 from those prevailing at the date of entry into force of the WTO
Agreement so as to increase the degree of inconsistency with the
provisions of Article 2. TRIMs introduced less than 180 days before the
date of entry into force of the WTO Agreement shall not benefit from the
transitional arrangements provided in paragraph 2.
5. Notwithstanding the provisions of
Article 2, a Member, in order not to disadvantage established enterprises which
are subject to a TRIM notified under paragraph 1, may apply during the
transition period the same TRIM to a new investment (i) where the
products of such investment are like products to those of the
established enterprises, and (ii) where necessary to avoid distorting
the conditions of competition between the new investment and the
established enterprises. Any TRIM so applied to a new investment shall
be notified to the Council for Trade in Goods. The terms of such a TRIM
shall be equivalent in their competitive effect to those applicable to
the established enterprises, and it shall be terminated at the same
time.
B. Interpretation and Application of Article 5
1. Article 5.1
9. At its meeting of 20 February 1995, the
Council for Trade in Goods adopted a standard format for notifications
required under Article 5.1(12), which had been recommended by the
Preparatory Committee for the World Trade Organization.(13)
10. With respect to
Article 5.1 notifications,
at its meeting on 3 April 1995, the General Council adopted the
recommendation of the TRIMs Committee relating to notifications required
under Article 5.1.(14)
2. Article 5.3
11. At its meeting of 3 and 8 May 2000, the
General Council agreed to “direct the Council for Trade in Goods to
give positive consideration to individual requests presented in
accordance with Article 5.3 by developing countries for extension of
transition periods for implementation of the TRIMs Agreement.”(15)
12. At its meeting of 31 July 2001, the
Council for Trade in Goods adopted an extension of the transitional
period for the elimination of TRIMs for seven developing countries at
their request.(16) The extension lasted until the end of 2001. At its
meeting of 5 November 2001, the Council for Trade in Goods adopted an
additional extension of the transition period for six of these Members
and for Thailand.(17) The length of the extension varied depending on the
Member concerned.(18)
13. At its meeting of 20 December 2001
Colombia was granted by the General Council a waiver of its TRIMS
obligations for certain bean products until 31 December 2003.(19)
14. On 22 December 2003, Pakistan made a
request to the Council for Trade in Goods for a three-year extension of
the transition period in which to eliminate its remaining TRIMs. As of
December 2004, a decision on this request is still pending.(20)
3. Article 5.5
15. A standard format has been adopted for
notifications made pursuant to this provision.(21)
However, to date no
such notifications have been made to the Council for Trade in Goods.
VII. Article 6
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A. Text of Article 6
Article 6: Transparency
1. Members reaffirm, with respect to TRIMs,
their commitment to obligations on transparency and notification in
Article X of GATT 1994, in the undertaking on “Notification”
contained in the Understanding Regarding Notification, Consultation,
Dispute Settlement and Surveillance adopted on 28 November 1979 and in
the Ministerial Decision on Notification Procedures adopted on 15 April
1994.
2. Each Member shall notify the Secretariat of
the publications in which TRIMs may be found, including those applied by
regional and local governments and authorities within their territories.
3. Each Member shall accord sympathetic
consideration to requests for information, and afford adequate
opportunity for consultation, on any matter arising from this Agreement
raised by another Member. In conformity with Article X of GATT 1994 no
Member is required to disclose information the disclosure of which would
impede law enforcement or otherwise be contrary to the public interest
or would prejudice the legitimate commercial interests of particular
enterprises, public or private.
B. Interpretation and Application of Article 6
1. Article 6.2
16. At its meetings of 30 September and 1
November 1996, the TRIMs Committee decided that Members would provide
the Secretariat with the name(s) of publication(s) in which TRIMs may be
found.(22)
VIII. Article 7
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A. Text of Article 7
Article 7: Committee on Trade-Related Investment Measures
1. A Committee on Trade-Related Investment
Measures (referred to in this Agreement as the “Committee”) is
hereby established, and shall be open to all Members. The Committee
shall elect its own Chairman and Vice-Chairman, and shall meet not less
than once a year and otherwise at the request of any Member.
2. The Committee shall carry out
responsibilities assigned to it by the Council for Trade in Goods and
shall afford Members the opportunity to consult on any matters relating
to the operation and implementation of this Agreement.
3. The Committee shall monitor the operation
and implementation of this Agreement and shall report thereon annually
to the Council for Trade in Goods.
B. Interpretation and Application of Article 7
1. General
(a) Rules of procedure
17. At its meeting on 1 December 1995, the
Council for Trade in Goods approved the rules of procedure for the TRIMs
Committee.(23)
18. The TRIMs Committee reports to the Council
for Trade in Goods on an annual basis.(24)
(b) Observership
19. With respect to the observership for the
TRIMs Committee, see Chapter on WTO Agreement, Section XII.B.1(b) and
Section XXVI.(25)
2. Article 7.2
20. At its meeting on 20 February 1995 the
Council for Trade in Goods, in approving the standard format for
notifications specified under Article 5.1 and 5.5 of the
Agreement,
agreed to a proposal made by the Chairman of the Committee to the effect
that the TRIMs Committee would carry out the task assigned to the
Council for Trade in Goods with respect to notifications of TRIMs.(26)
21. At its meeting of 7 May 2002, the Council
for Trade in Goods adopted a decision in order to assign to the
Committee on TRIMs the work for continued discussion on implementation
issues, relating to special treatment for developing countries. The
decision stated that:
“Members agree in accordance with Article
7.2 of the TRIMs Agreement, the CTG will assign to the Committee on
TRIMs the responsibility for conducting the work on the outstanding
implementation issues contained in tirets 37-40 of the document
JOB(01)152/Rev.1. The TRIMs committee shall report regularly on the
progress of its work to the CTG, which will report to the Trade
Negotiating Committee in accordance with paragraph 12 of the Doha
Ministerial Declaration.”(27)
22. In its report to the General Council, the
TRIMs Committee noted that it had considered two proposals on special
and differential treatment submitted by the African Group(28) with respect
to Article 4 and Article 5.3 of the TRIMs
Agreement.
IX. Article 8
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A. Text of Article 8
Article 8: Consultation and Dispute Settlement
The provisions of Articles XXII and
XXIII of
GATT 1994, as elaborated and applied by the Dispute Settlement
Understanding, shall apply to consultations and the settlement of
disputes under this Agreement.
B. Interpretation and Application of Article 8
23. The following table lists the disputes in
which panel and/or Appellate Body reports have been adopted where the
provisions of the TRIMs Agreement were invoked:
|
|
Case Name |
Case Number |
Invoked Articles |
| 1 |
EC — Bananas III |
WT/DS27 |
Articles 2.1 and 5 |
| 2 |
Indonesia — Autos |
WT/DS54, WT/DS55, WT/DS59, WT/DS64 |
Articles 2.1 and 5.4 |
| 3 |
Canada — Autos |
WT/DS139, WT/DS142 |
Article 2 |
| 4 |
India — Autos |
WT/DS146, WT/DS175 |
Articles 2.1 and 2.2 |
| 5 |
Canada — Wheat Exports and Grain Imports |
WT/DS276 |
Article 2.1 |
X. Article 9
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A. Text of Article 9
Article 9: Review by the Council for Trade in Goods
Not later than five years after the date of
entry into force of the WTO Agreement, the Council for Trade in Goods
shall review the operation of this Agreement and, as appropriate,
propose to the Ministerial Conference amendments to its text. In the
course of this review, the Council for Trade in Goods shall consider
whether the Agreement should be complemented with provisions on
investment policy and competition policy.
B. Interpretation and Application of Article 9
24. In accordance with
Article 9, at its
meeting of 15 October 1999, the Council for Trade in Goods launched the
review of the operation of the TRIMs Agreement.(29) Upon request by
Members, a study on the use and effects of TRIMs and other performance
requirements was jointly prepared by the WTO and UNCTAD Secretariats,
which served as input for discussions under the Article 9 review of the
TRIMs Agreement.(30)
XI. Relationship
with other WTO Agreements back to top
A. GATT 1994
1. Whether conflict exists
25. The Panel on
EC — Bananas III, the Panel
examined the import licensing procedures of the European Communities
under GATT 1994, the Licensing Agreement and the TRIMs Agreement. After
determining that the Licensing Agreement applied to tariff quotas, the
Panel addressed the question whether GATT 1994 as well as the Licensing
Agreement and the TRIMs Agreement applied to the European Communities
import licensing procedures. The Panel defined the term “conflict”
between WTO agreements, as laid down in the General Interpretative Note
to Annex 1A; it held that a conflict exists when two obligations are
mutually exclusive and where a rule in one agreement prohibits what a
rule in another agreement explicitly permits:
“As a preliminary issue, it is necessary to
define the notion of ‘conflict’ laid down in the General
Interpretative Note. In light of the wording, the context, the object
and the purpose of this Note, we consider that it is designed to deal
with (i) clashes between obligations contained in GATT 1994 and
obligations contained in agreements listed in Annex
1A, where those
obligations are mutually exclusive in the sense that a Member cannot
comply with both obligations at the same time, and (ii) the situation
where a rule in one agreement prohibits what a rule in another agreement
explicitly permits.(31)
However, we are of the view that the concept
of ‘conflict’ as embodied in the General Interpretative Note does
not relate to situations where rules contained in one of the Agreements
listed in Annex 1A provide for different or complementary obligations in
addition to those contained in GATT 1994. In such a case, the
obligations arising from the former and GATT 1994 can both be complied
with at the same time without the need to renounce explicit rights or
authorizations. In this latter case, there is no reason to assume that a
Member is not capable of, or not required to, meet the obligations of
both GATT 1994 and the relevant Annex 1A Agreement.”(32)
26. Based on its reading of the term “conflict”
contained in the General Interpretative Note to Annex
1A, as referenced
in paragraph 25 above, the Panel on EC — Bananas III went on to examine
whether such conflict existed between the Licensing Agreement and the
TRIMs Agreement, on the one hand, and provisions of the GATT 1994, on
the other. The Panel concluded that this was not the case and that,
consequently, “the provisions of GATT 1994, the Licensing Agreement
and Article 2 of the TRIMS Agreement all apply to the EC’s import
licensing procedures for bananas”:
“Proceeding on this basis, we have to
ascertain whether the provisions of the Licensing Agreement and the
TRIMs Agreement, to the extent they are within the coverage of the terms
of reference of this Panel, contain any conflicting obligations which
are contrary to those stipulated by Articles
I, III, X, or
XIII of GATT 1994, in the sense that Members could not comply with the obligations
resulting from both Agreements at the same time or that WTO Members are
authorized to act in a manner that would be inconsistent with the
requirements of GATT rules. Wherever the answer to this question is
affirmative, the obligation or authorization contained in the Licensing
or TRIMs Agreement would, in accordance with the General Interpretative
Note, prevail over the provisions of the relevant article of GATT 1994.
Where the answer is negative, both provisions would apply equally.
Based on our detailed examination of the
provisions of the Licensing Agreement, Article 2 of the TRIMs Agreement
as well as GATT 1994, we find that no conflicting, i.e. mutually
exclusive, obligations arise from the provisions of the three Agreements
that the parties to the dispute have put before us. Indeed, we note that
the first substantive provision of the Licensing Agreement, Article
1.2,
requires Members to conform to GATT rules applicable to import
licensing.
In the light of the foregoing discussion, we
find that the provisions of GATT 1994, the Licensing Agreement and
Article 2 of the TRIMS Agreement all apply to the EC’s import
licensing procedures for bananas.”(33)
2. Relationship between
Article III:4 of the
GATT 1994 and Article 2 of the TRIMs Agreement
27. The Panel on
EC — Bananas III found that
the allocation of import licences to a particular category of operators
was inconsistent with Article III:4 of
GATT
1994.(34) With respect to the
claim that this measure was also inconsistent with Article 2 of the
TRIMs Agreement, the Panel, further to noting that the TRIMs Agreement
essentially interprets and clarifies the provisions of Article III where
trade-related investment measures are concerned, decided to resort to
judicial economy:
“[W]e first examine the relationship of the
TRIMs Agreement to the provisions of GATT. We note that with the
exception of its transition provisions(35) the TRIMs Agreement essentially
interprets and clarifies the provisions of Article III (and also
Article XI) where trade-related investment measures are concerned. Thus the
TRIMs Agreement does not add to or subtract from those GATT obligations,
although it clarifies that Article III:4 may cover investment-related
matters.
We emphasize that in view of the importance of
the TRIMs Agreement in the framework of the agreements covered by the
WTO, we have examined the claims and legal arguments advanced by the
parties under the TRIMs Agreement carefully. However, for the reasons
stated in the previous paragraph, we do not consider it necessary to
make a specific ruling under the TRIMs Agreement with respect to the
eligibility criteria for the different categories of operators and the
allocation of certain percentages of import licences based on operator
categories. On the one hand, a finding that the measure in question
would not be considered a trade-related investment measure for the
purposes of the TRIMs Agreement would not affect our findings in respect
of Article III:4 since the scope of that provision is not limited to
TRIMs and, on the other hand, steps taken to bring EC licensing
procedures into conformity with Article III:4 would also eliminate the
alleged non-conformity with obligations under the TRIMs Agreement.”(36)
28. In
Indonesia — Autos, the European
Communities and the United States claimed that the Indonesian 1993 car
programme, by providing for tax benefits for finished cars incorporating
a certain percentage value of domestic parts and components, and for
customs duty benefits for imported parts and components used in cars
incorporating a certain percentage value of domestic products, violated
the provisions of Article 2 of the TRIMs Agreement, and
Article III:4 of
the GATT 1994. Japan, the European Communities and the United States
also claimed that the Indonesian 1996 car programme, by providing for
local content requirements linked to tax benefits for National Cars
(which by definition incorporated a certain percentage value of domestic
products), and to customs duty benefits for imported parts and
components used in National Cars, violated the provisions of Article 2
of the TRIMs Agreement and Article III:4 of the GATT 1994. In response
to these claims, the Panel analysed the relationship between the TRIMs
Agreement and Article III of GATT 1994, holding that “on its face the
TRIMs Agreement is a fully fledged agreement in the WTO system”:
“Since the complainants have raised claims
that the local content requirements of the car programmes violate both
the provisions of Article III:4 of GATT and
Article 2 of the TRIMs Agreement, we must consider which claims to examine first. In deciding
which claims to examine first, we must, initially, address the
relationship between Article III of GATT and the TRIMs Agreement.
In this regard, we note first that on its face
the TRIMs Agreement is a fully fledged agreement in the WTO system. The
TRIMs Agreement is not an ‘Understanding to GATT 1994’, unlike the
six Understandings which form part of the GATT 1994. The TRIMs Agreement
and Article III:4 prohibit local content requirements that are TRIMs and
therefore can be said to cover the same subject matter. But when the
TRIMs Agreement refers to ‘the provisions of Article III’, it refers
to the substantive aspects of Article
III; that is to say, conceptually,
it is the ten paragraphs of Article III that are referred to in
Article
2.1 of the TRIMs Agreement, and not the application of Article III in
the WTO context as such. Thus if Article III is not applicable for any
reason not related to the disciplines of Article III itself, the
provisions of Article III remain applicable for the purpose of the TRIMs
Agreement. This view is reinforced by the fact that Article 3 of the
TRIMs Agreement contains a distinct and explicit reference to the
general exceptions to GATT. If the purpose of the TRIMs Agreement were
to refer to Article III as applied in the light of other (non
Article III) GATT rules, there would be no need to refer to such general
exceptions.(37)”(38)
29. The Panel on
Indonesia — Autos found
confirmation for its finding that the TRIMs Agreement was “a fully
fledged agreement in the WTO system” in the fact that the TRIMs
Agreement had introduced “special transitional provisions including
notification requirements”. Subsequently, referring to the Appellate
Body Report in EC — Bananas III, the Panel then held that it would begin
its analysis with the TRIMs Agreement, because “the TRIMs Agreement is
more specific than Article III:4 as far as the claims under
consideration are concerned”:
“Moreover, it has to be recognized that the
TRIMs Agreement, in addition to interpreting and clarifying the
provisions of Article III where trade-related investment measures are
concerned, has introduced special transitional provisions including
notification requirements.(39) This reinforces the conclusion that the
TRIMs Agreement has an autonomous legal existence, independent from that
of Article III. Consequently, since the TRIMs Agreement and
Article III
remain two legally distinct and independent sets of provisions of the
WTO Agreement, we find that even if either of the two sets of provisions
were not applicable the other one would remain applicable. And to the
extent that complainants have raised separate and distinct claims under
Article III:4 of GATT and the TRIMs Agreement, each claim must be
addressed separately.
As to which claims, those under Article III:4 of
GATT or Article 2 of the TRIMs Agreement, to examine first, we consider
that we should first examine the claims under the TRIMs Agreement since
the TRIMs Agreement is more specific than Article III:4 as far as the
claims under consideration are concerned. A similar issue was presented
in Bananas III, where the Appellate Body discussed the relationship
between Article X of GATT and
Article 1.3 of the Licensing Agreement and
concluded that the Licensing Agreement being more specific it should
have been applied first.(40) This is also in line with the approach of the
panel and the Appellate Body in the Hormones dispute, where the measure
at issue was examined first under the SPS Agreement since the measure
was alleged to be an SPS measure.”(41)
30. The Panel on
Indonesia — Autos found that
the tax and tariff benefits contingent on meeting local requirements
under the Indonesian car programmes constituted “advantages” within
the meaning of the chapeau of paragraph 1 of the Illustrative List of
TRIMs, and as a result were inconsistent with Article 2.1 of the TRIMs
Agreement.(42) The Panel then decided that it was unnecessary to consider
claims raised with respect to these measures under Article III:4 of GATT
1994:
“The complainants have claimed that the
local content requirements under examination, and which we find are
inconsistent with the TRIMs Agreement, also violate the provisions of
Article III:4 of GATT. Under the principle of judicial economy,(43) a
panel only has to address the claims that must be addressed to resolve a
dispute or which may help a losing party in bringing its measures into
conformity with the WTO Agreement. The local content requirement aspects
of the measures at issue have been addressed pursuant to the claims of
the complainants under the TRIMs Agreement. We consider therefore that
action to remedy the inconsistencies that we have found with Indonesia’s
obligations under the TRIMs Agreement would necessarily remedy any
inconsistency that we might find with the provisions of Article III:4 of
GATT. We recall our conclusion that non applicability of Article III
would not affect as such the application of the TRIMs Agreement. We
consider therefore that we do not have to address the claims under
Article III:4, nor any claim of conflict between Article III:4 of GATT
and the provisions of the SCM Agreement.”(44)
31. In
Canada — Autos, the complainants raised
claims pertaining to conditions concerning the level of Canadian value
added and the maintenance of a certain ratio between the net sales value
of vehicles produced in Canada and the net sales value of vehicles sold
for consumption in Canada. These claims were based upon both Article
III:4 of the GATT 1994 and the TRIMs Agreement. The Panel, in noting
that claims were raised under both Article III:4 of GATT 1994 and the
TRIMs Agreement, decided to examine first the claims raised under
Article III:4 of GATT 1994. The Panel first took note of the findings of
the previous two panels on the issue of the relationship between Article
III:4 of the GATT 1994 and the TRIMs Agreement :
“We note that, in two recent dispute
settlement proceedings, consideration has been given to the issue of the
sequence of the examination of claims raised with respect to the same
measure under Article III:4 of the GATT and the TRIMs Agreement.
In EC — Bananas III (ECU), claims were raised
under Article III:4 of the GATT and
Article 2.1 of the TRIMs Agreement
regarding aspects of the European Communities import licensing
procedures for bananas. The panel in that dispute decided to treat the
claims under Article 2.1 of the TRIMs Agreement together with its
consideration of the claims under Article III:4 of the
GATT. The panel
found that the allocation to certain operators of a percentage of the
licences allowing the importation of third-country and non-traditional
ACP bananas at in-quota tariff rates was inconsistent with the
requirements of Article III:4 of the
GATT. In light of that finding, the
panel did not consider it necessary to make a specific ruling on whether
this aspect of these import licensing procedures was also inconsistent
with Article 2.1 of the TRIMs Agreement.
In Indonesia — Autos, claims under Article
III:4 of the GATT and Article 2.1 of the TRIMs Agreement were raised
with respect to certain local content measures applied by Indonesia
regarding automobiles. The panel in that dispute decided that it should
first examine the claims under the TRIMs Agreement on the grounds that
‘the TRIMs Agreement is more specific than Article III:4 as far as the
claims under consideration are concerned’. After finding that the
measures at issue were inconsistent with Article 2.1 of the TRIMs
Agreement, the panel determined that it was not necessary to make a
finding on the question of whether these measures were inconsistent with
Article III:4 of the GATT.”(45)
32. After reviewing previous panel findings on
the relationship between Article III:4 of the GATT 1994 and the TRIMs
Agreement, the Panel on Canada — Autos held that it was not “persuaded
that the TRIMs Agreement can be properly characterized as being more
specific than Article III:4 in respect of the claims raised by the
complainants in the present case”.
“In the present dispute, the parties have
not explicitly addressed this question of which of the claims raised
under Article III:4 of the GATT and
Article 2.1 of the TRIMs Agreement
should be examined first. Implicit in the order in which they have
presented their claims is the view that these claims should be addressed
first under Article III:4 of the
GATT. While we are aware of the
statement made by the Appellate Body in EC — Bananas III, and referred
to by the panel in Indonesia — Autos, that a claim should be examined
first under the agreement which is the most specific with respect to
that claim, we are not persuaded that the TRIMs Agreement can be
properly characterized as being more specific than Article III:4 in
respect of the claims raised by the complainants in the present case.
Thus, we note that there is disagreement between the parties not only on
whether the measures at issue can be considered to be ‘trade-related
investment measures’ but also on whether the Canadian value added
requirements and ratio requirements are explicitly covered by the
Illustrative List annexed to the TRIMs Agreement. It would thus appear
that, assuming that the measures at issue are ‘trade-related
investment measures’, their consistency with Article III:4 of the GATT
may not be able to be determined simply on the basis of the text of the
Illustrative List but may require an analysis based on the wording of
Article III:4. Consequently, we doubt that examining the claims first
under the TRIMs Agreement will enable us to resolve the dispute before
us in a more efficient manner than examining these claims under Article
III:4.
In light of the foregoing considerations, we
decide that, consistent with the approach of the panel in EC — Bananas
III, we will examine the claims in question first under Article III:4 of
the GATT.”(46)
33. After finding that certain requirements
concerning domestic value added were inconsistent with Article III:4 of
the GATT 1994,(47) the Panel on Canada
— Autos addressed the issue of why
it considered that it was not necessary to address claims that had been
raised with respect to these requirements under the TRIMs Agreement. The
Panel stated:
“In light of the finding in the preceding
paragraph, we do not consider it necessary to make a specific ruling on
whether the CVA requirements provided for in the MVTO 1998 and the SROs
are inconsistent with Article 2.1 of the TRIMs
Agreement. We believe
that the Panel’s reasoning in EC — Bananas III as to why it did not
make a finding under the TRIMs Agreement after it had found that certain
aspects of the EC licensing procedures were inconsistent with Article
III:4 of the GATT also applies to the present case. Thus, on the one
hand, a finding in the present case that the CVA requirements are not
trade-related investment measures for the purposes of the TRIMs
Agreement would not affect our finding in respect of the inconsistency
of these requirements with Article III:4 of the GATT since the scope of
that provision is not limited to trade-related investment measures. On
the other hand, steps taken by Canada to bring these measures into
conformity with Article III:4 would also eliminate the alleged
inconsistency with obligations under the TRIMs Agreement.”(48)
34. The Panel on
Canada — Autos rejected a
claim that the application of certain requirements regarding the ratio
of sales of vehicles produced by a manufacturer in Canada to the net
sales value of vehicles of the same class sold for consumption in Canada
by the manufacturer was in violation of Article III:4 of the GATT
1994.
In view of that finding, the Panel considered that it also had to
dismiss the claim raised under Article 2.1 of the TRIMs Agreement with
respect to this measure. The Panel noted:
“In light of the foregoing considerations,
we find that the European Communities has failed to demonstrate that, by
applying ratio requirements under the MVTO 1998 and the SROs as one of
the conditions determining the eligibility of duty-free importation of
motor vehicles, Canada is according to motor vehicles imported duty free
less favourable treatment with respect to their internal sale than to
like domestic motor vehicles. The claim of the European Communities
regarding the inconsistency of the ratio requirements with Article III:4
must therefore be rejected. Because of this finding with respect to the
claim of the European Communities regarding the consistency of the ratio
requirements with Article III:4 of the
GATT, we must also reject the
claim of the European Communities that these requirements are
inconsistent with Article 2.1 of the TRIMs
Agreement. We note in this
regard that the European Communities claims that these ratio
requirements are trade-related investment measures which are
inconsistent with Article 2.1 of the TRIMs Agreement because they
violate Article III:4 of the
GATT.”(49)
35. In
India — Autos, the United States and
the European Communities alleged violations of Articles III:4 and
XI:1
of the GATT 1994 and Article 2 of the TRIMs Agreement in relation to
certain Indian measures affecting trade and investment in the automotive
industry, that India maintained on balance-of-payment grounds. The
Panel, in noting that the measures at issue could violate both the GATT
1994 and the TRIMs Agreement, decided to first examine GATT 1994
provisions. The Panel, commenced its analysis of the relationship
between the GATT 1994 and the TRIMs Agreement in the light of the Panel
Report on Canada — Autos(50) and held that it was “not convinced that,
as a general matter, the TRIMS Agreement could inherently be
characterised as more specific than the relevant GATT provisions”:
“As a general matter, even if there was some
guiding principle to the effect that a specific covered Agreement might
appropriately be examined before a general one where both may apply to
the same measure, it might be difficult to characterize the TRIMs
Agreement as necessarily more ‘specific’ than the relevant GATT
provisions. Although the TRIMS Agreement ‘has an autonomous legal
existence’, independent from the relevant GATT provisions, as noted by
the Indonesia — Autos panel, the substance of its obligations refers
directly to Articles III and XI of the
GATT, and clarifies their
meaning, inter alia, through an Illustrative list. On one view, it
simply provides additional guidance as to the identification of certain
measures considered to be inconsistent with Articles III:4 and
XI:1 of
the GATT 1994. On the other hand, the TRIMs Agreement also introduces
rights and obligations that are specific to it, through its notification
mechanism and related provisions. An interpretative question also arises
in relation to the TRIMs Agreement as to whether a complainant must
separately prove that the measure in issue is a ‘trade-related
investment measure’. For either of these reasons, the TRIMs Agreement
might be arguably more specific in that it provides additional rules
concerning the specific measures it covers. The Panel is therefore not
convinced that, as a general matter, the TRIMs Agreement could
inherently be characterized as more specific than the relevant GATT
provisions.”(51)
36. After noticing that this case was not one
of those in which the order of examination of claims could have any
practical significance, the Panel in India — Autos took into
consideration the order given by the complainants in their replies to
specific questions from the Panel on the proper order of the examination
of their claims and the impact that the order selected could have on the
potential application of the principle of judicial economy in the case.
As a result, the Panel decided first to examine the GATT 1994
provisions.(52) After finding that both the indigenization and the
neutralization conditions were inconsistent with Articles III:4 and
XI:1
of the GATT 1994, the Panel in India — Autos applied the principle of
judicial economy and did not separately consider whether such conditions
also violated the provisions of the TRIMs Agreement.(53)
B. SCM Agreement
37. In
Indonesia — Autos, claims regarding
various Indonesian measures adopted pursuant to the Indonesian National
Car programmes were raised under the GATT 1994, the SCM Agreement and
the TRIMs Agreement. In considering an argument advanced by Indonesia
that that the measures in dispute were covered only by the SCM
Agreement, the Panel discussed inter alia whether a measure can be
covered at the same time by the provisions of the TRIMs Agreement and
those of the SCM Agreement. The Panel began by considering whether there
was a conflict between the SCM Agreement and the TRIMs
Agreement. The
Panel first noted that the General Interpretative Note to Annex 1A did
not apply to the relationship between these two agreements and that this
relationship would have to be considered “in the light of the general
international law presumption against conflicts”:
“In considering this issue … we need to
examine whether there is a general conflict between the SCM Agreement
and the TRIMs Agreement. We note first that the interpretative note to
Annex IA of the WTO Agreement is not applicable to the relationship
between the SCM Agreement and the TRIMs Agreement. The issue of whether
there might be a general conflict between the SCM Agreement and the
TRIMs Agreement would therefore need to be examined in the light of the
general international law presumption against conflicts and the fact
that under public international law a conflict exists in the narrow
situation of mutually exclusive obligations for provisions that cover
the same type of subject matter.”(54)
38. The Panel on
Indonesia — Autos then went
on to hold that “the SCM Agreement and the TRIMs Agreement are
concerned with different types of obligations and cover different
subject matters”:
“In this context the fact that the drafters
included an express provision governing conflicts between GATT and the
other Annex 1A Agreements, but did not include any such provision
regarding the relationship between the other Annex 1A Agreements, at a
minimum reinforces the presumption in public international law against
conflicts. With respect to the nature of obligations, we consider that,
with regard to local content requirements, the SCM Agreement and the
TRIMs Agreement are concerned with different types of obligations and
cover different subject matters. In the case of the SCM Agreement, what
is prohibited is the grant of a subsidy contingent on use of domestic
goods, not the requirement to use domestic goods as such. In the case of
the TRIMs Agreement, what is prohibited are TRIMs in the form of local
content requirements, not the grant of an advantage, such as a subsidy.
A finding of inconsistency with Article 3.1(b)
of the SCM Agreement can be remedied by removal of the subsidy, even if
the local content requirement remains applicable. By contrast, a finding
of inconsistency with the TRIMs Agreement can be remedied by a removal
of the TRIM that is a local content requirement even if the subsidy
continues to be granted. Conversely, for instance, if a Member were to
apply a TRIM (in the form of local content requirement), as a
condition for the receipt of a subsidy, the measure would continue to be
a violation of the TRIMs Agreement if the subsidy element were replaced
with some other form of incentive. By contrast, if the local content
requirements were dropped, the subsidy would continue to be subject to
the SCM Agreement, although the nature of the relevant discipline under
the SCM Agreement might be affected. Clearly, the two agreements
prohibit different measures. We note also that under the TRIMs
Agreement, the advantage made conditional on meeting a local content
requirement may include a wide variety of incentives and advantages,
other than subsidies. There is no provision contained in the SCM
Agreement that obliges a Member to violate the TRIMs Agreement, or vice
versa.
We consider that the SCM and TRIMs Agreements
cannot be in conflict, as they cover different subject matters and do
not impose mutually exclusive obligations. The TRIMs Agreement and the
SCM Agreement may have overlapping coverage in that they may both apply
to a single legislative act, but they have different focus, and they
impose different types of obligations.”(55)
39. The Panel on
Indonesia — Autos found
support for its finding referenced in paragraphs 37 and
38 above in the
Appellate Body Reports in Canada — Periodicals and EC — Bananas
III:
“In support of this finding, we agree with
the principles developed in the Periodicals(56) and
Bananas
III(57) cases
concerning the relationship between two WTO agreements at the same level
within the structure of WTO agreements. It was made clear that, while
the same measure could be scrutinized both under GATT and under GATS,
the specific aspects of that measure to be examined under each agreement
would be different. In the present case, there are in fact two
different, albeit linked, aspects of the car programmes for which the
complainants have raised claims. Some claims relate to the existence of
local content requirements, alleged to be in violation of the TRIMs
Agreement, and the other claims relate to the existence of subsidies,
alleged to cause serious prejudice within the meaning of the SCM
Agreement.
[W]e do not consider that the application of
the TRIMs Agreement to this dispute would reduce the SCM Agreement, and Article
27.3 thereof, to ‘inutility’. On the contrary, with Article
27.3 of the SCM Agreement, those subsidy measures of developing
countries that are contingent on compliance with TRIMs (in the form of
local content requirement) and that are permitted during the transition
period provided under Article 5 of the TRIMs
Agreement, are not
prohibited by Article 3.1(b) of the SCM
Agreement, for the transition
period specified in Article 27.3 of the SCM
Agreement.
We find that there is no general conflict
between the SCM Agreement and the TRIMs Agreement. Therefore, to the
extent that the Indonesian car programmes are TRIMs and subsidies, both
the TRIMs Agreement and the SCM Agreement are applicable to this
dispute.”(58)
XII. Annex I
back to top
A. Text of Annex I
Illustrative List
1. TRIMs that are inconsistent with the
obligation of national treatment provided for in paragraph 4 of Article
III of GATT 1994 include those which are mandatory or enforceable under
domestic law or under administrative rulings, or compliance with which
is necessary to obtain an advantage, and which require:
(a) the purchase or use by an enterprise of
products of domestic origin or from any domestic source, whether
specified in terms of particular products, in terms of volume or value
of products, or in terms of a proportion of volume or value of its local
production; or
(b) that an enterprise’s purchases or use of
imported products be limited to an amount related to the volume or value
of local products that it exports.
2. TRIMs that are inconsistent with the
obligation of general elimination of quantitative restrictions provided
for in paragraph 1 of Article XI of GATT 1994 include those which are
mandatory or enforceable under domestic law or under administrative
rulings, or compliance with which is necessary to obtain an advantage,
and which restrict:
(a) the importation by an enterprise of
products used in or related to its local production, generally or to an
amount related to the volume or value of local production that it
exports;
(b) the importation by an enterprise of
products used in or related to its local production by restricting its
access to foreign exchange to an amount related to the foreign exchange
inflows attributable to the enterprise; or
(c) the exportation or sale for export by an
enterprise of products, whether specified in terms of particular
products, in terms of volume or value of products, or in terms of a
proportion of volume or value of its local production.
B. Interpretation and Application of Annex I
40. With respect to references to the
Illustrative List contained in Annex I, see paragraphs 5 and
30 above.
Footnotes:
1. Panel Report on
Indonesia — Autos, para. 14.73. back to text
2. Panel Report on Indonesia
— Autos, paras.
14.80-14.81. back to text
3. Panel Report on Indonesia
— Autos, paras.
14.82-14.83. back to text
4. Panel Report on Indonesia
— Autos, para.
14.71. back to text
5. Panel Report on Indonesia
— Autos, paras.
14.71-14.72. back to text
6. See Section
XII. back to text
7. Panel Report on
Indonesia — Autos, para.
14.88. back to text
8. (footnote original) In Parts and
Components, the panel recognized that requirements that an enterprise
voluntarily accepts to gain government-provided advantages are
nonetheless “requirements” (italics in original): “5.21 The Panel
noted that Article III:4 refers to ‘all laws, regulations or
requirements affecting (the) internal sale, offering for sale, purchase,
transportation, distribution or use.’ The Panel considered that the
comprehensive coverage of ‘all laws, regulations or requirements
affecting’ the internal sale, etc. of imported products suggests that
not only requirements which an enterprise is legally bound to carry out,
but also those which an enterprise voluntarily accepts in order to
obtain an advantage from the government constitute ‘requirements’
within the meaning of that provision … .” Panel Report on EEC
— Parts and Components. back to text
9. Panel Report on Indonesia
— Autos, paras.
14.88-14.91. back to text
10. Panel Report on Canada — Wheat, para.
6.375 back to text
11. Panel Report on Canada — Wheat, para.
6.381. back to text
12. G/C/M/1, Section 2(A). back to text
13. PC/IPL/8. back to text
14. WT/GC/M/3, Section 5. The text of the
decision can be found in WT/L/64. back to text
15. WT/GC/M/55, Annex II, the third bullet
point. back to text
16. These seven countries were: Argentina
(G/L/460), Colombia (G/L/461), Malaysia (G/L/462), Mexico (G/L/463),
Philippines (G/L/464), Romania (G/L/465), Pakistan (G/L/466). back to text
17. The first extension to Thailand was
granted in a waiver, adopted by the General Council at its meeting of 31
July 2001 (WT/L/410). The waiver expired the 31 December 2002. The
waiver stated that after this period, if another extension proved
necessary, it would be granted by a decision of the Council of Trade in
Goods. This new extension was adopted by the Council for Trade in Goods
at its meeting of 5 November 2001 (G/L/504). back to text
18. Argentina — G/L/497 (31 December 2003),,
Malaysia — G/L/499 (31 December 2003), Mexico — G/L/500 (31 December
2003), Pakistan — G/L/501 (31 December 2003), Philippines — G/L/502 (31
June 2003), Romania — G/L/503 (31 May 2003), Thailand — G/L/504 (31
December 2003). back to text
19. G/L/441. The waiver confirmed the
decision to extend the transitional period for the elimination of TRIMs
for Colombia that the Council of Trade in Goods had adopted at its
meeting of 5 November 2001. G/L/498. back to text
20. G/C/W/501. back to text
21. G/TRIMS/3. back to text
22. G/TRIMS/M/5, Section B. The text of the
decision can be found in G/TRIMS/5. back to text
23. G/C/M/7, Section 2. back to text
24. The reports are contained in documents
G/L/37, 133, 193, 259, 319, 390, 589, 649, 705 and 705/Corr.1. back to text
25. On 17 March 1999, the TRIMs Committee
granted regular observer status to those organizations which had
observer status on an ad hoc basis, see G/TRIMS/M/6. back to text
26. G/C/M/1, para. 2.1. back to text
27. G/C/M/60, Section VI. back to text
28. TN/CTD/W/3/Rev.2. back to text
29. G/C/M/41, Section 7. back to text
30. G/C/W/307 and G/C/W/307/Add.1. back to text
31. (footnote original) For instance,
Article XI:1 of GATT 1994 prohibits the imposition of quantitative
restrictions, while Article XI:2 of GATT 1994 contains a rather limited
catalogue of exceptions. Article 2 of the Agreement on Textiles and
Clothing (“ATC”) authorizes the imposition of quantitative
restrictions in the textiles and clothing sector, subject to conditions
specified in Article 2:1-21 of the
ATC. In other words, Article XI:1 of
GATT 1994 prohibits what Article 2 of the ATC permits in equally
explicit terms. It is true that Members could theoretically comply with
Article XI:1 of GATT, as well as with Article 2 of the
ATC, simply by
refraining from invoking the right to impose quantitative restrictions
in the textiles sector because Article 2 of the ATC authorizes rather
than mandates the imposition of quantitative restrictions. However, such
an interpretation would render whole Articles or sections of Agreements
covered by the WTO meaningless and run counter to the object and purpose
of many agreements listed in Annex 1A which were negotiated with the
intent to create rights and obligations which in parts differ
substantially from those of the GATT 1994. Therefore, in the case
described above, we consider that the General Interpretative Note
stipulates that an obligation or authorization embodied in the ATC or
any other of the agreements listed in Annex 1A prevails over the
conflicting obligation provided for by GATT 1994. back to text
32. Panel Report on EC — Bananas III, paras.
7.159-7.160. back to text
33. Panel Report on EC — Bananas III, paras.
7.161-7.163. back to text
34. Panel Report on EC — Bananas III, para.
7.182. back to text
35. (footnote original) We have already
dismissed the Complainants’ claim under the transition provisions of
Article back to text
36. Panel Report on EC — Bananas III, paras.
7.185-7.186. back to text
37. (footnote original) We note that a
similar drafting technique was used with the TRIPS Agreement which
cross-refers to provisions of other international treaties. back to text
38. Panel Report on Indonesia
— Autos, paras.
14.60-14.61. back to text
39. (footnote original) We note that
Indonesia has put emphasis on a particular statement of the Bananas III
panel concerning the relationship between Article III of GATT and the
TRIMs Agreement. We consider that that statement has to be understood in
the particular context of that dispute between two developed countries
(no transition period was therefore applicable) where the panel had
already reached a conclusion that the measure at issue violated Article
III:4 of GATT. Therefore there was no need to further discuss the TRIMs
Agreement since any action to remedy the inconsistency found under
Article III:4 of GATT would necessarily remedy inconsistencies under the
TRIMs Agreement. In the present case, we have to address the legal
relationship between these two agreements. back to text
40. (footnote original) The Appellate Body
in EC — Bananas III stated in paragraph 204: “Although Article X:3(a)
of the GATT 1994 and Article 1.3 of the Licensing Agreement both apply,
the Panel, in our view, should have applied the Licensing Agreement
first, since this agreement deals specifically, and in detail, with the
administration of import licensing procedures. If the Panel had done so,
then there would have been no need for it to address the alleged
inconsistency with Article X:3(a) of the GATT
1994.” back to text
41. Panel Report on Indonesia — Autos, paras.
14.62-14.63. back to text
42. Panel Report on Indonesia — Autos, paras.
14.91-14.92. back to text
43. (footnote original) As defined by the
Appellate Body in US
— Wool Shirts and Blouses, pp. 17-20. back to text
44. Panel Report on Indonesia
— Autos, para.
14.93. back to text
45. Panel Report on Canada — Autos, paras.
10.60-10.62. back to text
46. Panel Report on Canada — Autos, paras.
10.63-10.64. back to text
47. Panel Report on Canada — Autos, paras.
10.90 and 10.130. back to text
48. Panel Report on Canada — Autos, para.
10.91. See also para. 10.131. back to text
49. Panel Report on Canada — Autos, para.
10.150. back to text
50. See para. 32 of this
Chapter. back to text
51. Panel Report on India — Autos, para.
7.157. back to text
52. Panel Report India — Autos, paras.
7.158-7.162. back to text
53. Panel Report India — Autos, paras.
7.323-7.324. back to text
54. Panel Report on Indonesia
— Autos, para.
14.49. back to text
55. Panel Report on Indonesia
— Autos, paras.
14.50-14.52. back to text
56. (footnote original) In Canada
— Periodicals, the Appellate Body stated at page 19: “The entry into
force of the GATS, as Annex 1B of the WTO
Agreement, does not diminish
the scope of application of the GATT 1994”. back to text
57. (footnote original) In EC
— Bananas
III, the Appellate Body stated in paragraph 221: “The second issue is
whether the GATS and the GATT are mutually exclusive agreements. (…)
Given the respective scope of application of the two agreements, they
may or may not overlap, depending on the nature of the measures at
issue. Certain measures could be found to fall exclusively within the
scope of the GATT 1994, when they affect trade in goods. certain
measures could be found to fall exclusively within the scope of the
GATS, when they affect the supply of services as services. There is yet
a third category of measures that could be found to fall within the
scope of both the GATT 1994 and the GATS. (…) [W]hile the same measure
could be scrutinized under both agreements, the specific aspects of that
measure examined under each agreement could be different.” back to text
58. Panel Report on Indonesia
— Autos, paras.
14.49-14.55. back to text
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