The Agreement on Trade-Related Investment Measures (TRIMs) are rules that are applicable to the domestic regulations a country applies to foreign investors, often as part of an

industrial policy An industrial policy (IP) or industrial strategy of a country is its official strategic effort to encourage the development and growth of all or part of the economy, often focused on all or part of the manufacturing sector. The government takes m ...

. The agreement, concluded in 1994, was negotiated under the WTO's predecessor, the

General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its pre ...

(GATT), and came into force in 1995. The agreement was agreed upon by all members of the World Trade Organization. Trade-Related Investment Measures is one of the four principal legal agreements of the WTO trade treaty. TRIMs are rules that restrict preference of domestic firms and thereby enable international firms to operate more easily within foreign markets. Policies such as local content requirements and trade balancing rules that have traditionally been used to both promote the interests of domestic industries and combat restrictive business practices are now banned.

Origin

In the late 1980s, there was a significant increase in

foreign direct investment A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct co ...

across the world. However, some of the countries receiving foreign investment imposed numerous restrictions on that investment designed to protect and foster domestic industries, and to prevent the outflow of foreign exchange reserves. Examples of these restrictions include local content requirements (which require that locally produced goods be purchased or used), manufacturing requirements (which require the domestic manufacturing of certain components),

trade balancing Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct excha ...

requirements, domestic sales requirements, technology transfer requirements, export performance requirements (which require the export of a specified percentage of production volume), local equity restrictions, foreign exchange restrictions,

remittance A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes wit ...

restrictions, licensing requirements, and employment restrictions. These measures can also be used in connection with fiscal incentives as opposed to requirement. Some of these investment measures distort trade in violation of GATT Articles III and XI, and are therefore prohibited. Until the completion of the Uruguay Round negotiations, which produced a well-rounded Agreement on Trade-Related Investment Measures (hereinafter the "TRIMs Agreement"), the few international agreements providing disciplines for measures restricting foreign investment provided only limited guidance in terms of content and country coverage. The OECD Code on Liberalization of Capital Movements, for example, requires members to liberalize restrictions on direct investment in a range of areas. The OECD Code's efficacy, however, is limited by the numerous reservations made by each of the members. In addition, there are other international treaties, bilateral and multilateral, under which signatories extend most-favored-nation treatment to direct investment. Only a few such treaties, however, provide national treatment for direct investment. The Asia-Pacific Economic Cooperation Investment Principles adopted in November 1994 are general rules for investment but they are non- binding.

References

{{World Trade Organization World Trade Organization agreements Foreign direct investment Industrial policy Treaties concluded in 1994 Treaties entered into force in 1995 Treaties of Albania Treaties of Angola Treaties of Antigua and Barbuda Treaties of Argentina Treaties of Armenia Treaties of Australia Treaties of Austria Treaties of Bahrain Treaties of Bangladesh Treaties of Barbados Treaties of Belgium Treaties of Belize Treaties of Benin Treaties of Bolivia Treaties of Botswana Treaties of Brazil Treaties of Brunei Treaties of Bulgaria Treaties of Burkina Faso Treaties of Burundi Treaties of Cambodia Treaties of Cameroon Treaties of Canada Treaties of Cape Verde Treaties of the Central African Republic Treaties of Chad Treaties of Chile Treaties of the People's Republic of China Treaties of Taiwan Treaties of Colombia Treaties of the Republic of the Congo Treaties of Costa Rica Treaties of Ivory Coast Treaties of Croatia Treaties of Cuba Treaties of Cyprus Treaties of the Czech Republic Treaties of the Democratic Republic of the Congo Treaties of Denmark Treaties of Djibouti Treaties of Dominica Treaties of the Dominican Republic Treaties of Ecuador Treaties of Egypt Treaties of El Salvador Treaties of Estonia Treaties entered into by the European Union Treaties of Fiji Treaties of Finland Treaties of France Treaties of Gabon Treaties of the Gambia Treaties of Georgia (country) Treaties of Germany Treaties of Ghana Treaties of Greece Treaties of Grenada Treaties of Guatemala Treaties of Guinea Treaties of Guinea-Bissau Treaties of Guyana Treaties of Haiti Treaties of Honduras Treaties of Hong Kong Treaties of Hungary Treaties of Iceland Treaties of India Treaties of Indonesia Treaties of Ireland Treaties of Israel Treaties of Italy Treaties of Jamaica Treaties of Japan Treaties of Jordan Treaties of Kazakhstan Treaties of Kenya Treaties of Kuwait Treaties of Kyrgyzstan Treaties of Laos Treaties of Latvia Treaties of Lesotho Treaties of Liechtenstein Treaties of Lithuania Treaties of Luxembourg Treaties of Macau Treaties of Madagascar Treaties of Malawi Treaties of Malaysia Treaties of the Maldives Treaties of Mali Treaties of Malta Treaties of Mauritania Treaties of Mauritius Treaties of Mexico Treaties of Mongolia Treaties of Montenegro Treaties of Morocco Treaties of Mozambique Treaties of Myanmar Treaties of Namibia Treaties of Nepal Treaties of the Netherlands Treaties of New Zealand Treaties of Nicaragua Treaties of Niger Treaties of Nigeria Treaties of Norway Treaties of Oman Treaties of Pakistan Treaties of Panama Treaties of Papua New Guinea Treaties of Paraguay Treaties of Peru Treaties of the Philippines Treaties of Poland Treaties of Portugal Treaties of Qatar Treaties of South Korea Treaties of Moldova Treaties of Romania Treaties of Russia Treaties of Rwanda Treaties of Samoa Treaties of Saudi Arabia Treaties of Senegal Treaties of Seychelles Treaties of Sierra Leone Treaties of Singapore Treaties of Slovakia Treaties of Slovenia Treaties of the Solomon Islands Treaties of South Africa Treaties of Spain Treaties of Sri Lanka Treaties of Saint Kitts and Nevis Treaties of Saint Lucia Treaties of Saint Vincent and the Grenadines Treaties of Suriname Treaties of Eswatini Treaties of Sweden Treaties of Switzerland Treaties of Tajikistan Treaties of Thailand Treaties of North Macedonia Treaties of Togo Treaties of Tonga Treaties of Trinidad and Tobago Treaties of Tunisia Treaties of Turkey Treaties of Uganda Treaties of Ukraine Treaties of the United Arab Emirates Treaties of the United Kingdom Treaties of Tanzania Treaties of the United States Treaties of Uruguay Treaties of Vanuatu Treaties of Venezuela Treaties of Vietnam Treaties of Yemen Treaties of Zambia Treaties of Zimbabwe Treaties of Liberia

Origin

See also

References