UGC NET COMMERCE January 2017(Paper-II) Q49
- Option : C
- Explanation : Agreement on Trade-Related Investment Measures (TRIMs)
The agreement on TRIMs is related to the measures (conditions and restrictions) imposed by some countries on foreign investment. Incidentally, restrictive measures on foreign investment were widely imposed by developed countries. The agreement on TRIMs aims to eliminate or modify the conditions and restrictions on foreign investment that are not consistent with the rules and regulations of the WTO. In case of modification of the unreasonable conditions, a transition period is allowed to the parties concerned. The transition period allowed is two years for developed countries, five years for underdeveloped countries, and seven years for less developed countries.
Some important provisions of this agreement are as follows:
∎ No country can impose any performance clause on foreign investors in respect of foreign-exchange earnings, foreign equity participation, and transfer of technology.
∎ Foreign investors should be treated on par with national investors.
∎ There should be no restriction in the area of foreign investment—it should be open.
∎ There should be no restriction on the import of raw materials and intermediate components related to foreign investment.
