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Agreement On Trade Related Investment Measures Upsc

(Last Updated On: April 8, 2021)

Prior to the Uruguay Round negotiations, the link between trade and investment under the GATT was little taken into account. The Trade-Related Investment Measures Agreement (TRIM) is a rule that applies to national rules applied by a country to foreign investors, often as part of an industrial policy. The 1994 agreement was negotiated under the WTO`s predecessor, the General Agreement on Tariffs and Trade (GATT), and came into force in 1995. The agreement was reached by all members of the World Trade Organization. Trade-related investment measures are one of the four main legal agreements in the WTO trade agreement. Article 4 allows developing countries to temporarily deviate from the obligations under the ON TRIPS agreement under Article XVIII of the 1994 GATT and the corresponding WTO provisions on safeguard measures in the event of balance-of-payments difficulties. The World Trade Organization (WTO) is the only international organization in the world to deal with the rules of trade between nations. The focus is on WTO agreements, which have been negotiated and signed by most countries in the world and ratified by their parliaments. These requirements may be mandatory conditions for investments or may be accompanied by tax or other incentives. The TRIMs agreement does not apply to services.

All WTO member countries (offsite link) are contracting parties to this agreement. This agreement came into force on January 1, 1995. There is no expiration date. Perhaps the most significant development in terms of investment prior to the Uruguay Round was a panel decision in a dispute settlement process between the United States and Canada. In the Canada Administration of the Investment Review Act (FIRA) (BISD 30S/140, 1984), a GATT dispute resolution body reviewed a complaint filed by the United States regarding certain types of businesses or holdings actually required by Canadian authorities by foreign investors as conditions for authorizing investment projects. These commitments related to the purchase of certain products from domestic sources (local content requirements) and the export of a certain amount or percentage of production (export performance requirements). The proceeding concluded that the local content requirements are inconsistent with the GATT Article III landing requirement, paragraph 4, but that the export performance requirements are not inconsistent with GATT`s obligations. The group noted that the dispute over the consistency with gaTT of trade-specific measures adopted by Canada as part of its foreign investment legislation, not Canada`s right to regulate foreign investment as such, was highlighted. The FIRA Panel`s decision was important in that it confirmed that the existing GATT obligations applied to requirements imposed by governments in the context of investment, since these requirements discriminated between imported and domestic products. At the same time, the panel`s conclusion that the export performance requirements were not within the GATT`s jurisdiction underscored the limited scope of the existing GATT disciplines with respect to these trade-related requirements. Examples of inconsistent measures as defined in the annex`s illustration list are local content or commercial compensation requirements.

The agreement provides transitional provisions allowing members to maintain the notified TRIMs for a limited period after the WTO enters into force (two years for members of industrialized countries, five years for developing countries and seven years for least developed countries). The agreement also provides for the creation of a TRIM committee to monitor the implementation and implementation of these commitments. The measures covered in paragraph 2, point b) on the list include a limitation on imports in the form of currency clearing. The importation of products used in local production or related to local production is limited by a company in lim

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