Q. With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct?
1.Quantitative restrictions on imports by foreign investors are prohibited.
2.They apply to investment measures related to trade in both goods and services.
3.They are not concerned with the regulation of foreign investment.
Select the correct answer using the code given below:
a) 1 and 2 only
b) 2 only
c) 1 and 3 only
d) 1, 2 and 3
Correct Answer : c) 1 and 3 only
Question from UPSC Prelims 2020 GS Paper
Explanation:
Quantitative restrictions on imports by foreign investors are prohibited:
This statement is correct. The Agreement on Trade-Related Investment Measures (TRIMS) identifies measures that are inconsistent with the General Agreement on Tariffs and Trade (GATT) 1994 provisions regarding national treatment (Article III) and the prohibition of quantitative restrictions (Article XI). Therefore, TRIMS prohibits investment measures that mandate or enforce specific quantitative restrictions on imports or exports as a condition for the establishment, acquisition, expansion, management, conduct, or operation of an investment.
They apply to investment measures related to trade in both goods and services:
This statement is incorrect. TRIMS specifically applies to investment measures related to trade in goods only, not services. The regulation of trade in services is primarily covered under the General Agreement on Trade in Services (GATS). While TRIMS and GATS are both agreements under the World Trade Organization (WTO), they address different aspects of trade, with TRIMS focusing on the goods sector.
They are not concerned with the regulation of foreign investment:
This statement is correct. While TRIMS does concern the regulation of foreign investment, its focus is specifically on how these regulations affect trade in goods. It does not deal with the regulation of foreign investment in its entirety but rather with investment measures that have implications for trade in goods, such as local content requirements or trade balancing requirements. The main concern of TRIMS is ensuring that investment measures do not create trade distortions or barriers in violation of GATT principles.
Therefore, the statements 1 and 3 are correct, making option c) 1 and 3 only the right choice.
