Article 2.1 Of The Trims Agreement
As an agreement based on existing GATT disciplines on trade in goods, the agreement does not concern the regulation of foreign investment. The disciplines of the TRIPS Agreement focus on investment measures contrary to Articles III and XI of the GATT, i.e., which distinguish imported products from exported products and/or which create import or export restrictions. For example, a local content requirement imposed in a non-discriminatory manner on domestic and foreign companies is incompatible with the TRIPS Agreement, as it implies discriminatory treatment of imported products in favour of domestic products. The fact that there is no discrimination between domestic and foreign investors when imposing the requirement is irrelevant under the TRIPS Agreement. In the Punta del Este Ministerial Declaration, which opened the Uruguay Round, the issue of trade-related investment measures was addressed by a carefully crafted compromise for the new round: after examining the application of GATT articles in relation to the trade-restrictive and injurious effects of investment measures, other provisions should, where appropriate, be developed during the negotiations; which may be necessary to avoid such adverse effects on trade. The focus on the trade effects of this mandate has shown that the negotiations are not aimed at regulating investments as such. The Uruguay Round negotiations on trade-related investment measures were marked by strong differences of opinion among participants on the coverage and nature of possible new disciplines. While some industrialized countries proposed provisions prohibiting a wide range of measures in addition to local content requirements, which proved to be inconsistent with Article III of FIRA, many developing countries opposed them. The compromise, which ultimately emerged from the negotiations, is essentially limited to the interpretation and clarification of the application of GATT provisions on the domestic treatment of imported products (Article III) and quantitative restrictions on imports or exports (Article XI) to trade-related investment measures. As a result, the TRIPS Agreement does not cover many of the measures discussed in the Uruguay Round negotiations, such as export performance and the transfer of technology requirements. 2.
An illustrative list of TRIM incompatible with the national treatment obligation under Article III(4) of the GATT in 1994 and with the obligation to eliminate quantitative restrictions under Article XI(1) of the GATT in 1994 is set out in the Annex to this Agreement. Revision of the TRIPS Agreement: investment policy and competition policy as topics for future reflection back up (b) that a company that buys or uses imported products is limited to an amount corresponding to the volume or value of the local products it exports. Whereas, in the Punta del Este Declaration, ministers agreed that, after examining the application of gatt articles in relation to the trade and distorting effects of investment measures, it would be appropriate, where appropriate, to elaborate in the course of the negotiations other provisions which might be necessary to avoid such adverse effects on trade, All derogations provided for under GATT 1994 shall apply, where appropriate, to the provisions of this Agreement. .