Chapter — 12 AGREEMENT ON TRADE-RELATED INVESTMENT MEASURES (TRIMS) Until the Uruguay Round, foreign investment es to Ga: It was entirely the subject of national legislation on ly eo : bilateral treaties. But it is desired by the uae mote the EXpansig, and progressive liberalisation of world trade and to feetliate en c international frontiers so as to increase the — sin of all tradin partners, particularly developing country Mem peau heres free competition. Taking into account the particular is ra ie is om inci needs of developing country Members, panels 7 celal | ‘Velo peg country Members, agreed the Agreement of Ira ; AVestmen; Measures (TRIMS). This Agreement applies to investment measures Telateg to trade in goods only (Art. 1) NATIONAL TREATMENT AND QUANTITATIVE RESTRICTION (ARTS. 2 & 3) The TRIMS requires extension of the principles of national treatment and elimination of quantitative restrictions in the Articles ul or Article XI of the GATT, 1994 to the area of investment measures. National treatment means that a country may not regulate foreign investment so as to confer an advantage on locally produced goods or to disadvantage imports. The illustrative examples of prohibited TRIMS are the requirement that an enterprise use locally made inputs in production or limitations on imports related to the value or quantity of exports of locally produced (Annex. Para I). Second, the TRIMS agreement prevents countries from regulating investment in a manner that restricts the quantity of imports or exports by an enterprise. Illustrative examples of prohibited TRIMS are: 1, the limitations on imports to an amount related to the volume or value of locally produced goods that are exported; 2. limitation on imports in an amount related to the foreign exchange attributable to an enterprise; and 33 limitations on exports by an enterprise in an amount related to the volume or value of its local production. (Annex para 2). This requirement is subject to exemptions based on balance of payments considerations. All exceptions under GATT, 1994 shall apply, as appropriate to the provisions of the TRIMS. (Art. 3). 104Gi cpl ‘Agreement on Trade-Related Investment Measures (TRIMS) 1 SEVELOPING COUNTRY MEMBERS (ART, 4) i try Member shall be f; i developing countr Tee to deviate t i : provisions of the national treatment, and the U Ben ratily from the en nderstanding on th ments Provisions of GATT, 1994, and the Declaration ph eal 8 adopted on 28 Novermber 'sions of Articles II] and XI 05 of Pay’ Taken for Balance of Payments Purpose: res ; woo peril the Member to deviate from the provi of GATT: 1994. in regard to TRIMs, attention is drawn to the following : there is no requirement in the proposals to givea to foreign investors. Such investors would be restrictions as other investors in regard to imports, | Preferential treatment subject to the same ») government’s ability to impose export obli ‘to im gation on foreign or domestic investors remains unimpaired, <) _ There is nothing in the TRIMs Agreement to limit the application of investment measures such as limitation of acces: ceiling on foreign equity in domestic companies, etc., furthermore, there is no requirement to give a more advantageous treatment of foreign investors in the application of domestic laws, NOTIFICATION AND TRANSITIONAL ARRANGEMENTS (ART. 5) Members, within 90 days of the date of entry into force of the WTO Agreement, shall notify the council for Trade in Goods of all TRIMS they are applying that are not in conformity with the provisions of this Agreements. Such TRIMS of general or specific application shall be notified, along with their principal features. S to foreign investors, Each Member shall eliminate all notified TRIMS within two years of the date of entry into force of the WTO Agreement in the case of a developed country Member, within five years in the case of developing country Members, and within seven years in the case of a least-developed country Member, On request, the Council for Trade in Goods may extend the transition period for the elimination of TRIMS for a developing and least - developed country Members, which demonstrates particular difficulties in implementing the Provisions of this Agreement. During the transition period, a Member shall totmodify the terms of any TRIMS which it notified from those prevailing at the date of entry into force of the WTO Agreement so as to increase the degree of inconsistency. TRIMS introduced less than 180 days before the date of entry into force of the WTO Agreement shall not benefit from the transitional arrangements. Pt106 World Trade Organisation IChyy nt shall be notified to the, RIM shall be equivalent va established enterprises F he ang 5 Any TRIM 50 applied to a new investme! for Trade in Goods. The terms of such a competitive effect to those applicable to the shall be terminated at the same time. TRANSPARENCY (ART. 6) rect to TRIMS, their commitment to obligati hall notify the Secretariat of the Publicar, luding those applicd by regional and j, im, within their territories. No Member is required. Josure of which would impede law enforce, 7 uublic interest or would prejudice the interey, Members reaffirm, with rest on transparency. Each Member 5 in which TRIMs may be found, ine governments and authorities disclose information the disc! or otherwise be contrary of particular enterprises, PU! COMMITTEE ON TRADE-RELATED INVESTMENT MEASURES (ART. 7) to the p' blic or private. e-Related Investment Measures is established and ers. The Committee shall elect its own Chairman than once a year and otherwise A Committee on Trad shall be open to all Memb: and Vice-Chairman, and shall meet not less at the request of any Member. The Committee shall carry responsibilities assigned to it by the Council for Trade in Goods and shall afford Members the opportunity to consult on any matters relating to the operation and implementation of ‘this Agreement. The Committee shall monitor the operation and implementation of this ly to the Council for Trade in Agreement and shall report thereon annual Goods. DISPUTE SETTLEMENT AND REVIEW (ART. 8 & 9) The provisions of Dispute Settlement Understanding shall apply to consultations and the settlement of dispute under the TRIMS. Not later than five years after the date of entry into force of the WT0 Agreement, the Council for Trade in Goods shall review the operation of the TRIMS. The Council for Trade in Goods, in the course of review, shall consider whether the Agreement should be complemented with provisions 0” investment policy and competition policy.ch.12] Agreement on Trade-Related Investment Measures (TRIMS) 107 y1. AGREEMENT ON TRADE RE © RELATED IN MEASURES (TRIMS) AND oT The proposals of Agreement on TRIMS are narrow in se that the Member country should extend national treatment os rice no nes obligations. The export obligations practice adopted by ae inere are leveloping countries are 1" touched. Under the agreement India can conti measures such &s import balancing requirements on the pee ae a of payments difficulties. There is no implicit or explicit ee ae regarding entry on quantities of foreign direct investment. The waiver a ae adequate. On balance the proposal meets India’s dem - more than half way. The GATT rules are not restricting the frocdam of geveloping countries to frame and implement economic policy as per i requirements. The TRIMS agreement prevents the Indian government from ensuring that foreign investment promotes national objectives or encourages domestic industry. India will no longer have the power to prevent multinationals from merely extracting resources from India and dumping imported goods in the domestic market by requiring them to use locally produced goods as production inputs or limiting imports of an enterprise to an amount related to its exports. India will be prohibited from protecting its national interests despite the fact that foreign investment has historically increased imports and reduced exports. The TRIMS agreement prevents any discriminatory investment measures which favour goods produced by Indian companies over imports. However, Indian companies will be unable to complete on a completely equal basis with transnational corporations due to the great disparities -in financial and technological power. The future will be that foreign companies will take over control of most of the Indian market and deprive Indian companies of a fair opportunity to engage in trade.