UPSC Prelims 2020 · Question 86 of 100
UPSC Prelims 2020 question on Trade Related Investment Measures
- ExamUPSC CSE
- Year2020
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicExternal Sector of India
- DifficultyEasy
- TypeStatement
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:
Show answer
Answer: C. 1 and 3 only
Verdict
Correct statements: 1 and 3 → Option (c).
Statement by statement
Statement 1 – CORRECT: The TRIMs Agreement prohibits certain measures that violate the national treatment (Article III) and quantitative restrictions requirements (Article XI) of the General Agreement on Tariffs and Trade (GATT) 1994. The list of TRIMs agreed to be inconsistent with these articles includes measures which restrict the volume or value of imports such an enterprise can purchase. Hence statement 1 is correct.
Statement 2 – INCORRECT: TRIMs Agreement is a multilateral agreement on trade in goods, and not services. (TRIMs Agreement is a multilateral agreement on trade in goods, and not services). Hence statement 2 is not correct.
Statement 3 – CORRECT: TRIMs Agreement stipulates that certain measures adopted by Governments to regulate FDI can cause trade-restrictive and distorting effects. However, the agreement is only concerned with the trade effects of investment measures. It is not intended to deal with the regulation of investment as such and does not impact directly on WTO members' ability to regulate and place conditions upon the entry and establishment of foreign investment. Hence statement 3 is correct.