Local Content Requirements

Local content requirements in Global Commerce Policy

In this regard, a definition of this issue is as follows: sometimes also called mixing requirements. Governmental measures setting out certain minimum levels of locally made components to be incorporated in goods or services produced domestically. Minimum levels of local content may be set in the form of weight, volume, value, etc. The aims of such programs include, among others, encouraging the development of local industry, finding an assured market for an uncompetitive industry and the promotion of regional development. The entries on trade policy are here. All local content schemes entail a degree of protection for the suppliers of the component in question and therefore a higher cost for consumers. This is self-evident, since competitive industries have no need to search for captive markets. However, governments may decide that these costs are outweighed by the prospective benefits of the program. GATT Article III:5 (National Treatment on Internal Taxation and Regulation) prohibits internal quantitative regulations relating to the mixture, processing or use of products in specified amounts or the mandatory use of domestic products. See also Agreement on Trade-Related Investment Measures and FIRA panel.[1]

Local content requirementsin the wold Encyclopedia

For an introductory overview on international trade policy, see this entry.

Resources

Notes and References

1. Dictionary of Trade Policy, “Local content requirements” entry (OAS)

See Also