TRIMS – Investment Measures in International Trade
The TRIMS Agreement deals with how investment measures taken by governments affect trade in goods.
1. Meaning / Background
TRIMS (Trade-Related Investment Measures) is a WTO agreement that prohibits certain investment measures which are inconsistent with basic WTO principles of national treatment and prohibition of quantitative restrictions.
- Focuses on measures applied by governments to foreign investors which distort trade.
2. Key Provisions (4–6 Exam Points)
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National Treatment & Quantitative Restrictions
- Investment measures that violate GATT Article III (national treatment) or Article XI (prohibition of quantitative restrictions) are not allowed.
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Illustrative List of Prohibited TRIMS
- Local Content Requirement – e.g., foreign firm required to use a fixed percentage of domestic inputs.
- Trade Balancing Requirement – e.g., exports must match value of imports.
- Foreign Exchange Restrictions related to imports.
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Transitional Arrangements
- Developing countries were given longer time to eliminate inconsistent TRIMS.
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Notification and Review
- Members had to notify existing TRIMS and bring them into conformity within specified period.
Exam Focus
You do not need to memorise legal text; just remember 3–4 examples of prohibited measures like local content and trade balancing requirements.
3. TRIMS and Developing Countries (Including India)
- Concern that TRIMS limits policy space to require local sourcing or export obligations from foreign investors.
- At the same time, removal of such measures makes trade more transparent and less discriminatory.
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4. Quick Revision Points
- TRIMS relates to investment measures affecting trade in goods.
- Prohibits measures like local content and trade balancing requirements that violate national treatment and ban on quotas.
- Developing countries had transition period; debate continues on policy space.
5. Quiz Time 🎯
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