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:

[UPSC Civil Services Exam – 2020 Prelims]

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only

(d) 1, 2 and 3

Answer: (c)        

Explanation:

• Trade-Related Investment Measures provide quantitative restrictions on imports by foreign investors are prohibited. Hence statement 1 is correct.
• TRIMS agreement applies only to investment measures related to trade in goods and not in services and it is mentioned in Article 1 of the TRIMS agreement, hence statement 2 is incorrect.
• As per the TRIMs Agreement, members are required to notify the WTO Council for Trade in Goods of their existing TRIMs that are inconsistent with the agreement.
• TRIMs are rules that restrict the preference of domestic firms and thereby enable international firms to operate more easily within foreign markets.
• They don’t regulate foreign investment as such, which is governed by FEMA and DIPP guidelines/regulations. Hence statement 3 is correct.