Trims Agreement Refers To Treating Foreign Investment At With Domestic Investment

Prior to the Uruguay Round negotiations, the link between trade and investment under the GATT was little taken into account. Paragraph 2, point a) of the illustration list includes measures that limit the importation of products used in its local production by a company in general or an amount that relates to the volume or value of local production exported by the company. There is a conceptual similarity between this paragraph and paragraph 1, point b), in that they relate to the two trade equalization policy measures. The difference lies in the fact that paragraph 1, point b), deals with internal measures concerning products after importation, while paragraph 2, point a), deals with border measures concerning the importation of products. Paragraph 1, item a), from the illustration list includes local TRIMs that require the purchase or use by a company of products of national or national origin (local content requirements), while paragraph 1, point b), includes commercial compensation limiting the purchase or use of products imported by a company to an amount related to the volume or value of local products it exports. In both cases, the incompatibility with Article III:4 of the 1994 GATT results from the measure that the measure subjects imported products (purchased or used by a company) to less favourable terms than domestic products (to be bought or used by and by companies). In addition, there are other bilateral and multilateral international treaties under which signatories extend the most favourable treatment to direct investment. However, only a few of these contracts provide domestic treatment for direct investment. The investment principles adopted in November 1994 for Asia-Pacific economic cooperation are general investment rules, but are not binding.

In order not to harm the competitiveness of companies that are already subject to DESTS, governments are allowed to apply the same CONDITIONS to new foreign direct investment during the transition period described above as part of the “trade-related investment measures”. measures to restrict imports of products (parts and other products) used or related to its local production, by limiting access to foreign exchange by a company, by limiting its access to foreign exchange to an amount related to foreign exchange inflows attributable to the company. (Violation of GATT Article XI:1) Transitional period for the elimination of TRIMs incompatible with the agreement The TRIPS agreement has established that developing countries are hindering sustainable industrialization of developing countries without facing balance-of-payments shocks, by significantly reducing the flexibility available to developing countries. On the other hand, the industrialized countries argue for a further extension of the list of banned DTEs. But India should be cautious when there is its knot in the expansion of TRIMS, because it could make Indian production more vulnerable to cheap products from developed countries.