UPSC CSE Prelims
Question 94
With reference to 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 investment.
Select the correct answer using the code given below:
View correct answer and explanation
Correct answer: C
Correct Option: C (1 & 3 only)
Explanation: WTO TRIMs disciplines trade-distorting investment measures for GOODS, including certain local-content and trade-balancing restrictions; it does not govern services, nor general investment regulation itself.
Statement / Pair / Item-wise Analysis:
1. Correct - TRIMs prohibits WTO-inconsistent quantitative/import-related restrictions applied as trade-linked investment conditions.
2. Incorrect - The TRIMs Agreement covers trade in goods, not trade in services.
3. Correct - It disciplines certain trade effects of investment measures rather than comprehensively regulating foreign investment.
Option-wise Analysis:
A. Incorrect-includes incorrect item 2 (The TRIMs Agreement covers trade in goods, not trade in services); omits correct item 3 (It disciplines certain trade effects of investment measures rather than comprehensively regulating foreign investment).
B. Incorrect-includes incorrect item 2 (The TRIMs Agreement covers trade in goods, not trade in services); omits correct item 1 (TRIMs prohibits WTO-inconsistent quantitative/import-related restrictions applied as trade-linked investment conditions); omits correct item 3 (It disciplines certain trade effects of investment measures rather than comprehensively regulating foreign investment).
C. Correct-includes all and only valid statements/items 1, 3.
D. Incorrect-includes incorrect item 2 (The TRIMs Agreement covers trade in goods, not trade in services).
Review note: Statement 3 means TRIMs does not regulate FDI as such; it does restrict particular investment conditions.