Dispute Settlement under the Trade-Related Investment Measures Agreement (TRIMs) - 2

3. Research objectives

3.1. Research purpose

concerned with, referring to the present time.

Draw experiences for Vietnam, improve the effectiveness of dispute settlement within the WTO framework in general and disputes related to trade-related investment measures in particular.

3.2. Research tasks

- Contribute to supplementing and clarifying the theoretical and practical basis of dispute settlement within the framework of the WTO in general and the TRIMs Agreement in particular;

- Evaluate the results of dispute resolution related to TRIMs;

- Draw lessons and propose solutions that Vietnam needs to do to prevent risks and effectively resolve those disputes.

4. Research object and scope

- Research object: Regulations on investment measures related to trade

trade; WTO dispute settlement mechanism; cases relating to trade-related investment measures within the framework of the TRIMs – WTO Agreement.

- Scope of research: within the framework of the Agreement on Trade-Related Investment Measures (TRIMs) - WTO; Time from the establishment of the World Trade Organization to the time of thesis completion.

5. Research methods

The thesis is based on the methodology of Marxism-Leninism, Ho Chi Minh thought, viewpoints and guidelines of the Communist Party of Vietnam and the Socialist Republic of Vietnam related to the research issues. At the same time, the thesis also uses specific research methods such as: statistics, synthesis, comparison, analysis...

6. Novelty and contributions of the topic

- General assessment of the situation of dispute settlement for WTO trade-related investment measures in recent times;

- Clarifying some limitations and impacts on Vietnam when participating in dispute resolution;

- Some recommendations for solutions to improve the effectiveness of dispute resolution and prevent risks that may occur when participating in dispute resolution.

7. Thesis layout

enter

international .

In addition to the Introduction, Conclusion, and References, the thesis includes 3 Chapters:

Chapter 1 : Basic issues on disputes and dispute settlement related to TRIMs within the framework of WTO.

Chapter 2 : Practice of dispute settlement related to the Agreement and experiences of other countries.

TRIMs

Chapter 3: Issues of preventing and resolving disputes related to TRIMs in Vietnam.

Chapter 1

BASIC ISSUES OF DISPUTES AND RESOLUTION

TRIMs DISPUTES UNDER THE WTO FRAMEWORK

1.1. TRIMs Agreement

1.1.1. History of establishment

The Agreement on Trade-Related Investment Measures (TRIMs) is included in the four annexes of the Agreement Establishing the World Trade Organization signed in Marrakesh, Morocco on April 15, 1994 (this is the result of the Uruguay Round of negotiations, marking the birth of the World Trade Organization – WTO).

Having considered the operation of the GATT Agreement relating to investment measures that may restrict or distort trade liberalization, the Member States agreed that it was necessary to negotiate and develop additional regulations as necessary and appropriate to eliminate investment measures that have adverse effects on trade.

trade, at the Punta del Este Declaration (Uruguay Round). The TRIMs Agreement with

TRIMs therefore require members not to use discriminatory measures against foreign goods, nor to impose quantitative restrictions on goods moving across borders.

Prior to the Uruguay Round, the links between investment and trade were given little attention within the GATT. A chapter on foreign investment was included in the Havana Charter of 1948, but this Charter was not ratified and only a few trade policies were included in the General Agreement on Tariffs and Trade – GATT. Until 1948,

In 1955, the GATT participants adopted the Resolution on Investment for International Economic Development, in which investment issues were mentioned, especially the protection of foreign investors, by calling on countries to sign bilateral agreements that included provisions to guarantee and protect the assets of foreign investors.

It can be seen that the birth of the TRIMs Agreement is associated with many debates between developed and developing members, mainly related to the limitations or benefits obtained when using TRIMs. On the one hand, developed members believe that TRIMs need to be eliminated because they have negative effects on international trade, negatively affecting imports and exports. Developed members are all countries with advanced industries, with many multinational companies, their goods reaching markets around the world. On the other hand, developing members argue that it is necessary to use some measures to orient foreign investment sources in accordance with the country's economic development goals, avoiding monopoly from products of developed members.

Indeed, the most important development for investment in the pre-Uruguay Round period was the ruling of the dispute settlement body in the case involving the United States and Canada. Respondent: Canada – Administrative Measures under the Foreign Investment Review Act (FIRA). This was a GATT dispute in which the United States alleged that Canada had imposed conditions on foreign investors for approval of investment projects. Through agreements or requirements tied to the use of certain domestic products (local content requirements) and exports of certain proportions or percentages of output (export performance requirements). The dispute settlement body’s report concluded that Canada’s local content requirement was inconsistent with the national treatment obligation under Article III:4 of the GATT; but that the export performance requirement was not inconsistent with GATT obligations. The Panel's decision is important in that it affirms that the imposition and use of measures that discriminate against imported goods over domestic goods is a violation of GATT obligations. At the same time, the Panel's conclusion affirms the requirements for implementation

Exports are not covered by the GATT. The Uruguay Round of trade-related investment measures was marked by strong disagreement among members over the scope and nature of the disciplines. While some developed countries proposed that a range of local content requirements be eliminated because they were inconsistent with Article III of the GATT, many developing country members opposed this.

However, the later agreements were essentially limited to explaining and clarifying the application of trade-related investment measures under the GATT within the scope of Article III national treatment of imported goods and Article XI quantitative restrictions on imports or exports. Therefore

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GATT

(in the law)

vi Article III and Article XI). When the member

people

provisions of the TRIMs Agreement,

GATT. Conversely, to

clarify the cradle

(Articles III and XI ) the parties shall

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Refer to the TRIMs provisions to interpret and clarify the GATT provisions.

1.1.2. Contents of the TRIMs Agreement

As discussed above, TRIMs is essentially an Agreement aimed at

explains and clarifies the application of trade-related investment measures within the scope of Article III and Article XI of GATT 1994. Therefore, the content of TRIMs is quite concise, including 09 Articles regulating the implementation of TRIMs and an appendix including an illustrative list of measures inconsistent with the national treatment principle in Article III and quantitative restrictions in Article XI of GATT 1994, aiming to create equality and non-discrimination for foreign investors.

Scope of application

The scope of TRIMs “applies only to investment measures related to trade in goods” [55, Article 1]. Therefore, it can be seen that TRIMs only apply to goods, not to services.

The TRIMs Agreement does not specifically define what constitutes “trade-related investment measures”, so in the dispute settlement process, the Panel will

There is a section that provides analysis and assessment of whether the measures proposed by the parties are “trade-related investment measures”.

For example, the Panel Report in Indonesia – Measures Affecting the Automotive Industry. The Panel found that the “investment measures” used by Indonesia were aimed at promoting the development of automotive manufacturing capacity and the production of automotive components in Indonesia. In line with this objective, the measures had a significant impact on investment in the automotive industry, with the aim of enhancing competitiveness; encouraging the development of the automotive industry and its supporting industries (automotive components); encouraging the transfer of technology, contributing to broad-based employment; and increasing local content. The Panel emphasized that it did not provide a specific definition of investment but only considered how the issues at issue were related to investment. The Panel also held that the above measures, although not prescribed by the competent investment authority (as argued by Indonesia), were still considered investment-related measures [60, p. 342].

Thus, it can be seen that “investment measures” in this case can be requirements, or legal measures, administrative measures (methods) used to impact and influence foreign investment, it may not be decided by the competent investment authority.

Next, the term “trade-related” is understood to mean that if the above measures are used to directly or indirectly affect the movement of goods across borders (for example, imposing export and import quotas; requiring a balance between the proportion of imported and exported goods; or specifically requiring a localization rate, meaning that the member has given priority to using domestic products), therefore these measures affect trade, especially goods.

In short, it can be understood that “trade-related investment measures” are requirements and measures that have negative impacts on trade in goods, foreign investment, and the movement of goods across borders, and harm the interests of member countries under relevant agreements.

National Treatment Principle and Quantitative Restrictions

Article 2.1 of the TRIMs provides that “members shall not use the TRIMs in a manner inconsistent with the provisions of Articles III and XI of the GATT 1994”. These measures are clarified through a list of illustrative measures in the annex to the TRIMs [55, Article 2.2], including those that are mandatory or enforceable through domestic law or administrative decisions or conditions that impose a benefit only upon compliance with which.

Article III of the GATT provides for the principle of national treatment with respect to taxes and domestic regulations , which mainly deals with the purchase or use of products by enterprises. Accordingly, products imported from the territory of any contracting party into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products domestically in respect of laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use; including the imposition of higher taxes and charges on like products in the internal market; the imposition, directly or indirectly, of requirements for the use of domestic products, requirements for the achievement of certain local content.

However, this principle requires the following factors:

- Products are imported, and there are “similar products” in the country;

- Measures may be “laws, regulations, administrative decisions or requirements affecting the sale, offering for sale, purchase, transportation, distribution or use”; and

- Imported products are treated “less favourably” than the treatment given to domestic products.

Paragraph 1(a) of the Illustrative List [55, appendix] includes the local requirements: the requirement to purchase or use goods by a domestic enterprise or goods originating from the country (local content requirement); while Paragraph 1(b) includes the trade balance requirement, in which the restriction on the purchase (by value) or use of imported products by an enterprise must be equivalent to the quantity or value of domestic products that the enterprise exports.