Ans. Trade-Related
Investment Measures (TRIMs)
Foreign Direct Investment (FDI)
is a significant area of growth in the global economy and one of particular
importance to the European Union (EU). Recent figures claim that 36% of
worldwide FDI inflow originates from the EU and that the EU receives 19% of
world FDI inflow. It is a result of the increase in FDI that Trade-Related
Investment Measures (TRIMS) were included for the first time in the Uruguay
Round.
Whilst not aimed at protecting
and establishing multilateral rules on FDI, the new agreement nevertheless
recognizes that certain national measures attach conditions on FDI which result
it; a restriction and distortion of trade. The TRIMs agreement, therefore, sets
out to clarify what measures are or are not permissible. It includes a long
list of prohibited measures such as those which require particular levels of
local procurement by an enterprise or which restrict the volume or value of
imports that such an enterprise can purchase.
In general, the following are
listed as prohibited TRIMs :
i) requirements to purchase from domestic
sources
ii) limitations on the purchase
or use of imported products tied to the volume or value of local products
exported
iii) restrictions on importation
whether or not tied to the volume or value of local production exported; and -
restrictions on exportation or sale for export.
The TRIMS agreement increases
transparency by requiring the notification of all existing prohibited measures
to the WTO Secretariat. It further requires that these measures be removed
within the following time scales:
developed countries – two years
developing countries - five years
developed countries - seven years
In addition, a Committee on TRIMs
is to be established. Its responsibilities will include the monitoring and
implementation of the above commitments.
General Agreement on Trade in Services (GATS)
The Uruguay Round includes for
the first time a 'General Agreement on Trade in Services' (or 'GATS') which attempt
to do for services what GATT has done for trading goods by establishing a
multilateral framework for the reduction and elimination of barriers to
international trade in services. GATS establishes the Most Favoured Nation
('MFN') (equalization of treatment) principle for trade in services, which, it
is hoped, will lead to an improvement in the position of those countries
currently subject to discrimination. As with other GATT/WTO elements, GATS
contains a series of rules and specific commitments to open markets. Members of
the new WTO are now obliged to offer MFN status and provide market access
ensuring transparency to all service providers from countries bound by GATT.
Exemptions to MFN can be sought in specific circumstances. For example, it
should be noted that the EU has an MFN exemption in the audio-visual sector
and, therefore, is not bound to give equal treatment to third countries.
The GATS agreement contains three
elements :
i) a framework of general rules
and disciplines;
ii) annexes consisting of special
conditions relating to individual sectors; and
iii) national schedules of market
access commitments.
The GATS framework is made up of
29 articles, The scope of the agreement covers all internationally traded services,
howsoever, they may be delivered. Whilst GATS intends to protect services, it
does not apply directly to services themselves but to governmental measures
affecting trade in services. These measures can take the form of regulations,
rules, procedures, decisions, administrative actions, etc. and may be made by
any level of government.
Trade Related Intellectual Property (TRIPs)
A significant and ever increasing
volume of world trade is now regulated by Intellectual Property Rights (TRIPs)
in one form or another. As trading increases, so do incentives to breach PRs.
Counterfeiting, copying and 'piracy' are now widespread, thus presenting
barriers to fair trade. The situation is exacerbated by the fact that such
practices are not illegal in many of the less developed countries. The copying
of products has led to a considerable loss of export revenue amongst the
industrialized nations. The worst hit industries have been chemicals and
pharmaceuticals; but other major problem areas include books, records, software
and entertainment. It is estimated that the EU loses at least 10% of the value
of its exports to copyright piracy. An additional problem has been the
appropriation of brand names and even, in the case of wine and foodstuffs,
geographical appellations. This, coupled with poor quality in the 'secondary'
product, has had damaging effects on the reputation of genuine articles.
As a result of these growing
trends, Intellectual Property Rights were included in the Uruguay Round
negotiations. The Trade Related Intellectual Property ('TRIPS') agreement attempts
to regulate and standardize international IPR in order to prevent the above
mentioned abuses and so create a fairer trade market. The result has seen a
strengthening or existing international conventions, such as the Berne and
Paris Conventions for the protection of literary and artistic works, by
bringing them within the ambit of the WTO Dispute Settlement Mechanism. There
has also been a strengthening of IPRs in the following additional areas:
i) stronger protection of trade
mark;
ii) greater protection for
industrial designs, especially within the textile and clothing industry; !
iii) introduction of patent
protection in all countries for pharmaceutical and chemical products;
iv) extension to a worldwide
level of semi conductor protection;
v) prohibition of appropriation
and misuse of geographical appellations;
vi) establishment of a clear set
of principles for the enforcement of IPRs through the national courts. Breaches
will be subject to sanctions under the Dispute Settlement Procedure;
vii) setting up of a Council for
TRIPs to oversee the smooth running of the agreement; and
viii) establishment of the rules
on compulsory licensing necessary for developing countries.
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