With reference to the 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 investments. Select the correct answer using the code given below:

QUESTION

Medium

Economy

Prelims 2020

With reference to the Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct?

Quantitative restrictions on imports by foreign investors are prohibited.
They apply to investment measures related to trade in both goods and services.
They are not concerned with the regulation of foreign investments.

Select the correct answer using the code given below:

Select an option to attempt

Explanation

Statement 1 is correct: The Trade-Related Investment Measures (TRIMS) agreement under the World Trade Organization (WTO) prohibits quantitative restrictions on imports by foreign investors. This means that countries cannot impose conditions like mandatory local sourcing or trade-balancing requirements that distort free trade.

Statement 2 is incorrect: TRIMS only applies to trade in goods, not services. The regulation of trade in services falls under the General Agreement on Trade in Services (GATS), not TRIMS.

Statement 3 is correct: TRIMS is not directly concerned with the regulation of foreign investments. Instead, it focuses on investment measures that affect trade in goods, ensuring that they do not create barriers to international trade.

Hence, option C is the correct answer.

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