TRIMS
Agreement on Trade-Related Investment Measures
GENERAL FEATURES
This Agreement,applies only to measures that affect trade in goods.
Investment measures can have
trade-restrictive and distorting effects, it states that no Member shall apply a measure that is prohibited by the provisions of GATT Article III
TRIMs Agreement does not apply to
services.
TRADE-RESTRICTIVE
&
DISTORTING
EFFECTS
Measures which require particular levels
of local procurement by an enterprise ( local content requirements ).
Measures which limit a company s
imports or set targets for the company to export ( trade balancing
A local content requirement imposed in
a non-discriminatory manner on domestic and foreign enterprises is inconsistent with the TRIMs Agreement because it involves discriminatory
treatment of imported products in favour of domestic products.
The fact that there is no discrimination
between domestic and foreign investors in the imposition of the requirement is irrelevant under the TRIMs Agreement.
TRIMS INCONSISTENT WITH NT
Paragraph 1(a) local content, which
require the purchase or use by an
enterprise of products of domestic origin or domestic source (local content
requirements);
Paragraph 1(b) covers trade-balancing,
which limit the purchase or use of
TRIMS INCONSISTENT WITH QUANTITATIVE RESTRICTIONS (ART. XI:1) GATT
Paragraph 2(a) measures which limit the importation
by an enterprise of products used in its local
production, generally or to an amount related to the volume or value of local production exported by the enterprise.
Paragraph 2(b) restriction of imports in the form of a
foreign exchange balancing requirement. Importation by an enterprise of products used in or related to local production is limited by restricting the enterprise's access to foreign exchange to an amount related to the foreign exchange inflows attributable to the enterprise.
Paragraph 2(c) measures involving
restrictions on the exportation of or sale for export by an enterprise, whether
CASE
Short title: India Autos
Complainant: United States
Respondent: India
Third Parties: European Communities; Japan; Korea, Republic of
Agreements cited: (as cited in request for consultations)
2 June 1999
Panel Reportcirculated: 21 December 2001
Appellate Body Reportcirculated:
19 March 2002
Under these measures, imports of complete
automobiles and of certain parts and
components were subject to a system of non-automatic import licenses.
In accordance with Public Notice No. 60,
US COMPLAINTS
Achieve specified levels of local
content;
Achieve a neutralization of foreign
exchange by balancing the value of certain imports with the value of exports of cars and components over a stated period; and
Limit imports to a value based on the
previous year s exports.
PANEL & AB
India had acted inconsistently with Article III:4 GATT by imposing on automotive manufacturers an obligation to use a certain proportion of local parts and components in the manufacture of cars and automotive vehicles ( indigenization
condition);
India had acted inconsistently with Article III:4
GATT by imposing, in the context of the trade balancing condition, an obligation to offset
