TRIMS

Indian Economy glossary

Also called: Agreement on Trade-Related Investment Measures · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT

Meaning

The Agreement on Trade-Related Investment Measures (TRIMS, 1995) is a WTO agreement. It bans rules on investors that discriminate against imported goods. Its illustrative list, meaning examples rather than a complete list, names two main types:

  • local content requirements: a firm must use a set share of domestic inputs;
  • trade-balancing requirements: a firm's imports are limited to the value of its exports.

It stops countries from using investment conditions as hidden trade barriers.

Example

In US v India (DS456), India's National Solar Mission required solar cells and modules to be made in India. The WTO Appellate Body held in 2016 that this broke TRIMS and GATT Article III. India's later PLI schemes reward extra output instead of local sourcing, so they are designed to be TRIMS-compatible.

Don't confuse with

  • Bilateral investment treaty (BIT): a BIT protects foreign investors from unfair treatment by the host state. TRIMS limits host states from attaching trade-distorting conditions to investment.

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