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:
Answer & explanation
Answer: (c) 1 and 3 only
The WTO's TRIMs Agreement bans investment conditions that break the GATT rules on national treatment and quantitative restrictions, but it covers only trade in goods and does not regulate foreign investment as such. So statements 1 and 3 are correct and 2 is wrong.
- ✓ 1. Members may not apply any TRIM inconsistent with GATT Articles III or XI. The Agreement's illustrative list includes rules that limit an enterprise's imports of inputs, so import restrictions on investors are prohibited.
- ✗ 2. Article 1 says the Agreement applies to investment measures related to trade in goods only; services are not covered.
- ✓ 3. The WTO states that, being based on GATT disciplines on trade in goods, the Agreement is not concerned with the regulation of foreign investment.
Remember · TRIMs (Uruguay Round) cover only goods-related investment measures such as local-content and trade-balancing rules; they do not regulate foreign investment itself.
Sources
- WTO, Agreement on Trade-Related Investment Measures, Article 1 ↗ “This Agreement applies to investment measures related to trade in goods only (referred to in this Agreement as TRIMs) … TRIMs that are inconsistent with the obligation of general elimination of quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994 include those which are mandatory or enforceable under domestic law”
- WTO, Trade and investment: technical information ↗ “As an agreement that is based on existing GATT disciplines on trade in goods, the Agreement is not concerned with the regulation of foreign investment.”
Question and answer: UPSC's official GS Paper I (2020, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·