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 ✓ UPSC's answer
- (d) 1, 2 and 3
Why the answer is (c)
• The WTO's TRIMs Agreement (1994) bars investment measures that violate GATT's national-treatment (Article III) and quantitative-restriction (Article XI) rules.
• Statement 1 is correct: it prohibits measures such as local-content requirements and limits on imports by foreign investors (trade-balancing restrictions).
• Statement 3 is correct: TRIMs does not regulate foreign investment as such — countries stay free to decide entry and ownership rules; it only disciplines trade-distorting conditions attached to investment.
• Statement 2 is wrong: TRIMs applies only to trade in goods, not services (services are covered by GATS).
• Hence 1 and 3 only, option (c).
Why the other options are wrong
- (a) 1 and 2 only
- Statement 2 is wrong: TRIMs covers goods only.
- (b) 2 only
- Statement 2 is wrong; statements 1 and 3 are correct.
- (d) 1, 2 and 3
- Statement 2 is wrong.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2020, held on 4 October 2020. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.