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Trade Related Investment Measures

19-SEP-2016 12:55

    The Trade Related Investment Measures (TRIMs) is a set of rules that apply to the domestic regulations a country applies to foreign investors, often as part of an industrial policy. The agreement was unanimously accepted by all members of the World Trade Organization and came into force in 1995.

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    What is TRIMs Agreement and what does it do?

    Trade-Related Investment Measures (TRIMs) of the World Trade Organization (WTO) unanimously accepted by the members of the WTO, not to apply certain investment measures related to trade in goods that restrict or distort trade.

    It prohibits certain measures that violate the national treatment and quantitative restrictions requirements of the General Agreement on Tariffs and Trade (GATT).

    List of International organisation and their abbreviation

    Prohibited terms of the TRIMs Agreement

    Local content requirement

    Measures requiring the purchase or use by an enterprise of domestic products, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production.

    Trade balancing requirements

    Measures requiring that an enterprise’s purchases or use of imported products be limited to an amount related to the volume or value of local products that it exports. (Violation of GATT Article III:4) Measures restricting the importation by an enterprise of products used in or related to its local production, generally or to an amount related to the volume or value of local production that it exports.

    Foreign exchange restrictions

    Measures restricting the importation by an enterprise of products (parts and other goods) used in or related to its local production by restricting its access to foreign exchange to an amount related to the foreign exchange inflows attributable to the enterprise.

    Export restrictions (Domestic sales requirements)

    Measures restricting the exportation or sale for export by an enterprise of products, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production.

    Exceptional Provisions of the TRIMs Agreement

    Transition period

    Measures specifically prohibited by the TRIMs Agreement need not be eliminated immediately, although such measures must be notified to the WTO within 90 days after the entry into force of the TRIMs Agreement. Developed countries will have a period of two years within which to abolish such measures; in principle, developing countries will have five years and least-developed countries will have seven years.

    Exceptions for developing countries

    Developing countries are permitted to retain TRIMs which constitute a violation of GATT Article III or XI, provided that the measures meet the conditions of GATT Article XVIII which allows specified derogation from the GATT provisions, by virtue of the economic development needs of developing countries.

    Equitable provisions

    In order to avoid damaging the competitiveness of companies already subject to TRIMs, governments are allowed to apply the same TRIMs to new foreign direct investment during the transitional period described in “Trade Related Investment Measures” above.

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