OMTEX CLASSES: The Agreement on Trade Related Investment Measures (TRIMs)

The Agreement on Trade Related Investment Measures (TRIMs)

The Agreement on Trade Related Investment Measures (TRIMs) is one of Agreements covered under Annex IA to the Marrakech Agreement, signed at the end of the Uruguay Round (UR) negotiations. The Agreement addresses investment measures that are trade related and that also violate Article III (National treatment) or Article XI (general elimination of quantitative restrictions) of the General Agreement on Tariffs and Trade. An illustrative list of the measures that are violative of the provisions of the Agreement is annexed to the text of the Agreement. These pertain broadly to local content requirements, trade balancing requirements and export restrictions, attached to investment decision making.
Provisions on elimination of notified TRIMs by WTO Members, and transition periods
The Agreement requires all WTO Members to notify the TRIMs that are inconsistent with the provisions of the Agreement, and to eliminate them after the expiry of the transition period provided in the Agreement. Transition periods of two years in the case of developed countries, five years in the case of developing countries and seven years in the case of LDCs, from the date of entry into force of the Agreement (i.e. 1st January 1995) are provided in the Agreement.
Temporary deviation on BOP grounds
The Agreement allows developing countries to deviate temporarily from its provisions on balance of payments (BOP) grounds (as per the provisions of Article XVIII.B of GATT, 1994).
India’s notified TRIMs
As per the provisions of Art. 5.1 of the TRIMs Agreement India had notified three trade related investment measures as inconsistent with the provisions of the Agreement:
Local content (mixing) requirements in the production of News Print,
Local content requirement in the production of Rifampicin and Penicillin – G, and
Dividend balancing requirement in the case of investment in 22 categories consumer goods.
Such notified TRIMs were due to be eliminated by 31st December, 1999. None of these measures is in force at present. Therefore, India does not have any outstanding obligations under the TRIMs agreement as far as notified TRIMs are concerned.
Present Status
The transition period allowed to developing countries ended on 31st December, 1999. However, Art. 5.3 provides for extension of such transition periods in the case of individual members, based on specific requests. In such cases individual Members have to approach the Council for Trade in Goods with justification based on their specific trade, financial and development needs. Accordingly 9 developing countries (Malaysia, Pakistan, Philippines, Mexico, Chile, Colombia, Argentina, Romania and Thailand) have applied for extension of transition period in respect of certain TRIMs which had been notified by them. Examination of their requests is underway in the Council for Trade in Goods of WTO.
India had proposed during the Seattle Ministerial Conference that:
Extension of transition period for developing countries should be on a multilateral basis and not on an individual basis;
Another opportunity should be provided to developing countries to notify un-notified TRIMs and maintain them for an extended transition period;
The Seattle Ministerial Conference was inconclusive and no decision could be taken on the proposals.
However, during the General Council meeting of 8th May, 2000, the following decisions, inter-alia, were taken :
"…… ..members agree 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".
"Members have noted the concerns of those Members who have not notified TRIMs or have not yet requested an extension. Consultations on the means to address these cases should also be pursued as a matter of priority, under the aegis of the General Council, by the Chairman of the Council for Trade in Goods".

Art. 9 of the Agreement envisages its review within five years of its coming into operation, i.e. by 1-1-2000.
The Council for Trade in Goods is to review the operation of the Agreement and, as appropriate, propose to the Ministerial Conference amendments to its text. The process of review has started but no specific proposals have been made by any Member as yet.