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General Agreement on Tariffs and Trade
(GATT) & Trade Related Investment
Qis College of Engg. Technology
Kop pula. Chandra Sekher
A Study on
General Agreement on Tariffs and Trade (GATT) &
Agreement on Trade Related Investment Measures (TRIMs)
Mini Project Report in Business Environment Submitted to JNTU, Kakinada in
Partial Fulfillment for the Award of the Degree of
“MASTER OF BUSINESS ADMINISTRATION”
(Reg. No. 13491E0037).
DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION
QIS COLLEGE OF ENGINEERING & TECHNOLOGY
An ISO 9001: 2008 Certified Institution and Accredited by NBA
(Affiliated to JNTU, Kakinada and Approved by AICTE)
Vengamukkapalem, Pondur Road
ONGOLE –523 272 .
Need for the study
Scope of the study
Review of literature
Fundamental Principles of GATT & objectives
15 Major Principles of GATT
General Agreements on TRADE & TARIFF
The literature examining the participation of developing countries in the General Agreement on Tariffs
and Trade (GATT) and International Trade Organization (ITO) negotiations generally sees their attitudes
towards these projects as having been driven exclusively by a commitment to import substitution. This
commitment, it is argued, led developing countries to oppose many aspects of the GATT/ITO project,
particularly the requirement for reciprocal tariff cuts. The purpose of this paper is to focus on examining the
critical period around the ultimately doomed negotiation of the Charter for an ITO and the process of creating
This paper draws from GATT documents and from the literature on economic history to give a more
comprehensive account of the motivating ideas underpinning developing countries attitudes to the post-war
This paper argues that this view misconstrues and caricatures the ideas and motivations underpinning
developing countries' attitudes towards the GATT and ITO. Though import substitution and the related
objective of industrialization each played a part in shaping developing countries' attitudes, they are only aspects
of a more complex set of aims and ideas. Developing countries were drawing from a range of key experiences
and ideas beyond simply import substitution in forming their attitude towards the GATT/ITO project, in
particular the volatility in commodity markets that preceded the negotiations, the legacy of colonialism and the
lessons provided by the ninetieth and twentieth century‘s on trade policy. Finally, this paper argues that the first
round of GATT negotiations shows that developing countries were substantially less opposed to reciprocal tariff
concessions than has previously been argued.
These findings are important for anyone who wants to understand the evolution of the GATT and the
role developing countries played in it, and the difficulties between the rich and poor nations that continue to
characterize negotiations in the World Trade Organization.
Resource :James Scott, (2010) "Developing countries in the ITO and GATT negotiations", Journal of International
Trade Law and Policy, Vol. 9 Iss: 1, pp.5 - 24
M.F.N (Developing countries), Tariffs,
Trade, World economy, Non- Discrimination,
The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating
international trade. According to its preamble, its purpose was the "substantial reduction of tariffs and other
trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis." It was
negotiated during the United Nations Conference on Trade and Employment and was the outcome of the failure
of negotiating governments to create the International Trade Organization (ITO). GATT was signed in 1947 and
lasted until 1994, when it was replaced by the World Trade Organization in 1995.
General agreement trade & taxes Is the world finance institution .This is the replacement of the WTO
(world trade organization).The main purpose of GATT is regulated to the Trade (Buy & Selling) & Taxes
structure of activities. General Agreement on Tariffs and Trade, an international treaty (1948–94) to promote
trade and economic development by reducing tariffs and other restrictions. It was superseded by the
establishment of the World Trade Organization in 1995.
Need for the Study:
The views expressed in this essay are purely personal and do not necessarily express the views of the
institutions is the associated with. This is a technical, academic and research output.
Scope of the Study:
Recognizing that their relations in the field of trade and economic Endeavour should be conducted with
a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real
income and effective demand, developing the full use of the resources of the world and expanding the
production and exchange of goods,
Being desirous of contributing to these objectives by entering into reciprocal and mutually
advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the
elimination of discriminatory treatment in international commerce,
To know that Non-discrimination.
To Study Multilateral agreements.
To Evaluate GATT rounds.
To know that 15 principles of GATT.
This data collected from electronic sources collected from the electronic sources i.e., from the
Google and the related websites and also Class subject materials.
Review of literature:
Principles of GATT
Objectives of GATT
15 Major principles provided at the end of GATT time period.
Trims (Trade Related Investment Measures).
The WTO Agreements cover goods, services and intellectual property. They spell out the principles of
liberalization, and the permitted exceptions. They include individual countries‘ commitments to lower customs
tariffs and other trade barriers, and to open and keep open services markets.
The agreements for the two largest areas — goods and services — share a common three-part outline, even
though the detail is sometimes quite different.
They start with broad principles: the General Agreement on Tariffs and Trade (GATT) (for goods), and
the General Agreement on Trade in Services (GATS). (The third area, Trade-Related Aspects of Intellectual
Property Rights (TRIPS), also falls into this category although at present it has no additional parts.)
They come extra agreements and annexes dealing with the special requirements of specific sectors or
Finally, there are the detailed and lengthy schedules (or lists) of commitments made by individual
countries allowing specific foreign products or service-providers access to their markets.
Principles of the trading system
The WTO agreements are lengthy and complex because they are legal texts covering a wide range of
activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government
purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and
much more. But a number of simple, fundamental principles run throughout all of these documents. These
principles are the foundation of the multilateral trading system.
Not: ‘Multilateral’ trading system ... the system operated by the WTO. Most nations — including almost all
the main trading nations — are members of the system. But some are not, so ―multilateral‖ is used to describe
the system instead of ―global‖ or ―world‖.
The trading system should be ...
• without discrimination — a country should not discriminate between its trading partners (giving them
equally ―most-favoured-nation‖ or MFN status); and it should not discriminate between its own and foreign
products, services or nationals (giving them ―national treatment‖);
• freer — barriers coming down through negotiation;
• predictable — foreign companies, investors and governments should be confident that trade barriers
(including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and market-opening
commitments are ―bound‖ in the WTO;
• more competitive — discouraging ―unfair‖ practices such as export subsidies and dumping products at below
cost to gain market share;
• more beneficial for less developed countries — giving them more time to adjust, greater flexibility, and
WTO embodies many reciprocal rights and obligations for trading countries and its core principle is the
Most-Favoured-Nations (MFN) clause. Under this, trade must be conducted on the basis of non-discriminationall members are bound to accord each other treatment in tariffs and trade as favourable as they give to any other
A second principle is that, to the maximum extend possible, trade protection
should be given to
domestic industries not through non-tariff measures such as quantitative restrictions, arbitrary technical
standards, and health regulations, etc; but only through the customs tariff, so that the extent protection is clear
and competition is still possible.
Other basic provisions are‖ national treatment‖(non-discrimination),transparency of trade rules, and general
prohibition of quantitative restrictions or quotas.
A final principle embodied in the WTO is ‗fair competition‘. Fair competition in the GATT context is reflected
in a number of provisions. Government subsidization of exports is prohibited andor countervail able by
Certain types of the behaviour pursued by exporting firms (as opposed to governments) are also
countervailing able. Thus, dumping by exporters-which usually mean charging a price in the export market that
is less than what is charged in the home market –maybe offset by importing country government‘s through the
imposition of an anti-dumping duty if the dumping injures domestic competitors.
GATT / WTO & WORLD TRADING SYSTEM
General Agreement on Tariffs and Trade (GATT)
The original intention was to create a third institution to handle the trade side of international economic
co-operation joining the two ―Bretton Woods‖ institutions, the World Bank and the International Monetary
Fund. Over 50 countries participated in negotiations to create an International Trade Organization (ITO) as a
specialized agency of the United Nations. The draft ITO Charter was ambitious. It extended beyond world trade
disciplines, to include rules on employment, commodity agreements, restrictive business practices, international
investment, and services.
Even before the talks concluded, 23 of the 50 participants decided in 1946 to negotiate to reduce and
bind customs tariffs. With the Second World War only recently ended, they wanted to give an early boost to
trade liberalization, and to begin to correct the legacy of protectionist measures which remained in place from
the early 1930s.
First round of negotiations resulted in 45,000 tariff concessions affecting $10 billion of trade, about one
fifth of the world‘s total. This 23 countries also agreed that they should accept some of the trade rules of the
draft ITO Charter. The combined package of trade rules and tariff concessions became known as the General
Agreement on Tariffs and Trade. It entered into force in January 1948, while the ITO Charter was still being
negotiated. The 23 became founding GATT members.
After this first round of negotiations in Geneva – Switzerland, GATT improved by 7 more rounds of
negotiations. Finally in the 8th round named Uruguay Round creation of WTO covered.
Trade without discrimination
Under the WTO agreements, countries cannot normally discriminate between their trading Partners.
Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do
the same for all other WTO members.
This principle is known as most-favoured-nation (MFN) treatment. It is so important that it is the first
article of the General Agreement on Tariffs and Trade (GATT), which governs trade in goods. MFN is also a
priority in the General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS) , although in each agreement the principle is handled slightly
differently. Together, those three agreements cover all three main areas of trade handled by the WTO.
Imported and locally-produced goods should be treated equally - at least after the foreign goods have
entered the market. The same should apply to foreign and domestic services, and to foreign and local
trademarks, copyrights and patents.
Since GATT‘s creation in 1947-48 there have been eight rounds of trade negotiations. A ninth round,
under the Doha Development Agenda, is now underway. At first these focused on lowering tariffs (customs
duties) on imported goods. As a result of the negotiations, by the mid-1990s industrial countries‘ tariff rates on
industrial goods had fallen steadily to less than 4%. Opening markets can be beneficial, but it also requires
adjustment. The WTO agreements allow countries to introduce changes gradually, through ―progressive
liberalization‖. Developing countries are usually given longer to fulfil their obligations.
With stability and predictability, investment is encouraged, jobs are created and consumers can fully
enjoy the benefits of competition — choice and lower prices. The multilateral trading system is an attempt by
governments to make the business environment stable and predictable.
In the WTO, when countries agree to open their markets for goods or services, they ―bind‖ their
commitments. For goods, these bindings amount to ceilings on customs tariff rates. Sometimes countries tax
imports at rates that are lower than the bound rates. Frequently this is the case in developing countries. In
developed countries the rates actually charged and the bound rates tend to be the same.
Promoting Fair Competition
The rules on non-discrimination — MFN and national treatment — wich we explained before are
designed to secure fair conditions of trade. So too are those on dumping (exporting at below cost to gain market
share) and subsidies. The issues are complex, and the rules try to establish what is fair or unfair, and how
governments can respond, in particular by charging additional import duties calculated to compensate for
damage caused by unfair trade.
Encouraging development and economic reform
The WTO system contributes to development. On the other hand, developing countries need flexibility
in the time they take to implement the system‘s agreements. And the agreements themselves inherit the earlier
provisions of GATT that allow for special assistance and trade concessions for developing countries.
Over three quarters of WTO members are developing countries and countries in transition to market
economies. During the seven and a half years of the Uruguay Round, over 60 of these countries implemented
trade liberalization programmes autonomously.
Turkey has been a member of WTO since 26 March 1995,
For personal interest
Goods schedules of Turkey,
Services schedules and MFN exemptions of Turkey ,
Trade Policy Reviews of Turkey,
Dispute cases involving Turkey,
GATT held a total of nine rounds,
and WTO trade rounds
Signing of GATT, 45,000 tariff
April 1947 7 months
concessions affecting $10 billion
April 1949 5 months
Countries exchanged some 5,000
Countries exchanged some 8,700
tariff concessions, cutting the
1948 tariff levels by 25%
Tariffs, admission of
$2.5 billion in tariff reductions
Tariff concessions worth $4.9
billion of world trade
Kennedy May 1964
Tariff concessions worth $40
billion of world trade
Tariff reductions worth more than
$300 billion dollars achieved
The round led to the creation of
of WTO, etc
WTO, and extended the range of
trade negotiations, leading to
major reductions in tariffs (about
40%) and agricultural subsidies,
an agreement to allow full access
for textiles and clothing from
developing countries, and an
extension of intellectual property
The round is not yet
concluded. Bali Package signed
on the 7th December 2013.
Annecy Round: 1949
The second round took place in 1949 in Annecy, France. 13 countries took part in the round. The main focus of
the talks was more tariff reductions, around 5000 in total.
Torquay Round: 1951
The third round occurred in Torque, England in 1950. Thirty-eight countries took part in the round. 8,700 tariff
concessions were made totaling the remaining amount of tariffs to ¾ of the tariffs which were in effect in 1948.
The contemporaneous rejection by the U.S. of the Havana Charter signified the establishment of the GATT as
a governing world body.
Geneva Round: 1955–59
The fourth round returned to Geneva in 1955 and lasted until May 1956. Twenty-six countries took part in the
round. $2.5 billion in tariffs were eliminated or reduced.
Dillon Round: 1960–62
The fifth round occurred once more in Geneva and lasted from 1960-1962. The talks were named after U.S.
Treasury Secretary and former Under Secretary of State, Douglas Dillon, who first proposed the talks. Twentysix countries took part in the round. Along with reducing over $4.9 billion in tariffs, it also yielded discussion
relating to the creation of the European Economic Community (EEC).
Kennedy Round: 1962–67
The sixth round of GATT multilateral trade negotiations, held from 1963 to 1967. It was named after U.S.
President John F. Kennedy in recognition of his support for the reformulation of the United States trade
agenda, which resulted in the Trade Expansion Act of 1962. This Act gave the President the widest-ever
As the Dillon Round went through the laborious process of item-by-item tariff negotiations, it became clear,
long before the Round ended, that a more comprehensive approach was needed to deal with the emerging
challenges resulting from the formation of the European Economic Community (EEC) and EFTA, as well as
Europe's re-emergence as a significant international trader more generally.
Japan's high economic growth rate portended the major role it would play later as an exporter, but the focal
point of the Kennedy Round always was the United States-EEC relationship. Indeed, there was an influential
American view that saw what became the Kennedy Round as the start of a transatlantic partnership that might
ultimately lead to a transatlantic economic community.
To an extent, this view was shared in Europe, but the process of European unification created its own stresses
under which the Kennedy Round at times became a secondary focus for the EEC. An example of this was the
French veto in January 1963, before the round had even started, on membership by the United Kingdom.
Another was the internal crisis of 1965, which ended in the Luxembourg Compromise. Preparations for the
new round were immediately overshadowed by the Chicken War, an early sign of the impact variable levies
under the Common Agricultural Policy would eventually have. Some participants in the Round had been
concerned that the convening of UCTAD, scheduled for 1964, would result in further complications, but its
impact on the actual negotiations was minimal.
In May 1963 Ministers reached agreement on three negotiating objectives for the round:
(a) Measures for the expansion of trade of developing counties as a means of furthering their economic
(b) Reduction or elimination of tariffs and other barriers to trade, and
(c) Measures for access to markets for agricultural and other primary products.
The working hypothesis for the tariff negotiations was a linear tariff cut of 50% with the smallest number of
exceptions. A drawn-out argument developed about the trade effects a uniform linear cut would have on the
dispersed rates (low and high tariffs quite far apart) of the United States as compared to the much more
concentrated rates of the EEC which also tended to be in the lower held of United States tariff rates.
The EEC accordingly argued for an evening-out or harmonization of peaks and troughs through its cerement,
double cart and thirty: ten proposals. Once negotiations had been joined, the lofty working hypothesis was
soon undermined. The special-structure countries (Australia, Canada, New Zealand and South Africa), so
called because their exports were dominated by raw materials and other primary commodities, negotiated their
tariff reductions entirely through the item-by-item method.
In the end, the result was an average 35% reduction in tariffs, except for textiles, chemicals, steel and other
sensitive products; plus a 15% to 18% reduction in tariffs for agricultural and food products. In addition, the
negotiations on chemicals led to a provisional agreement on the abolition of the American Selling Price (ASP).
This was a method of valuing some chemicals used by the noted States for the imposition of import duties
which gave domestic manufacturers a much higher level of protection than the tariff schedule indicated.
However, this part of the outcome was disallowed by Congress, and the American Selling Price was not
abolished until Congress adopted the results of the Tokyo Round. The results on agriculture overall were poor.
The most notable achievement was agreement on a Memorandum of Agreement on Basic Elements for the
Negotiation of a World Grants Arrangement, which eventually was rolled into a new International Grains
The EEC claimed that for it the main result of the negotiations on agriculture was that they "greatly helped to
define its own common policy". The developing countries, who played a minor role throughout the
negotiations in this Round, benefited nonetheless from substantial tariff cuts particularly in non-agricultural
items of interest to them.
Their main achievement at the time, however, was seen to be the adoption of Part IV of the GATT, which
absolved them from according reciprocity to developed countries in trade negotiations. In the view of many
developing countries, this was a direct result of the call at UNCTAD I for a better trade deal for them.
There has been argument ever since whether this symbolic gesture was a victory for them, or whether it
ensured their exclusion in the future from meaningful participation in the multilateral trading system. On the
other hand, there was no doubt that the extension of the Long-Term Arrangement Regarding International
Trade in Cotton Textiles, which later became the Multi-Fiber Arrangement, for three years until 1970 led to the
longer-term impairment of export opportunities for developing countries.
Another outcome of the Kennedy Round was the adoption of an Anti-dumping Code, which gave more precise
guidance on the implementation of Article VI of the GATT. In particular, it sought to ensure speedy and fair
investigations, and it imposed limits on the retrospective application of anti-dumping measures.
Kennedy Round took place from 1962-1967. $40 billion in tariffs were eliminated or reduced.
Tokyo Round: 1973–79
Reduced tariffs and established new regulations aimed at controlling the proliferation of non-tariff barriers and
voluntary export restrictions. 102 countries took part in the round. Concessions were made on $190 billion
Uruguay Round: 1986–94
The Uruguay Round began in 1986. It was the most ambitious round to date, hoping to expand the competence
of the GATT to important new areas such as services, capital, intellectual property, textiles, and agriculture.
123 countries took part in the round. The Uruguay Round was also the first set of multilateral trade
negotiations in which developing countries had played an active role.
Agriculture was essentially exempted from previous agreements as it was given special status in the areas of
import quotas and export subsidies, with only mild caveats. However, by the time of the Uruguay round, many
countries considered the exception of agriculture to be sufficiently glaring that they refused to sign a new deal
without some movement on agricultural products. These fourteen countries came to be known as the "Cairns
Group", and included mostly small and medium sized agricultural exporters such as
Australia, Brazil, Canada, Indonesia, and New Zealand.
The Agreement on Agriculture of the Uruguay Round continues to be the most substantial trade liberalization
agreement in agricultural products in the history of trade negotiations. The goals of the agreement were to
improve market access for agricultural products, reduce domestic support of agriculture in the form of pricedistorting subsidies and quotas, and eliminate over time export subsidies on agricultural products and to
harmonize to the extent possible sanitary and phytosanitary measures between member countries.
15 Major principles provided at the end of GATT time period.
NON- Tariff Barriers
National Resource products
Agriculture multilateral agreements
l. GAT‘s Principles
m. Bilateral Agreements.
n. Capital goods structure.
Turkey, committed to the expansion of the world trade, will further strengthen its bilateral relations with
all countries, including those which are not yet integrated into the multilateral trading system established under
the WTO system.
Trade related Investments
Legal Frame work
Examples of TRIMs Explicitly Prohibited by the 04
Exceptional Provisions of the TRIMs Agreement
Trade related investment measures (TRIMS)
This paper examines the experience of WTO members with the TRIMS agreement covering notification,
disputes and implementations issues from a developing country focus. Although the agreement is biased
against developing countries in that they are the ones that have had to make policy changes to comply with the
agreement the paper finds that such adjustment would have had to take place earlier had it not been for the
agreement. The paper also analyses prospective issues pertaining to the TRIMs agreement in the context of
both the mandated review of the agreement and a new round of trade negotiations.
The Agreement on Trade Related Investment Measures (TRIMs) are rules that apply to the domestic
regulations a country applies to foreign investors, often as part of an industrial policy. The agreement was
agreed upon by all members of the World Trade Organization. The agreement was concluded in 1994 and came
into force in 1995. (The WTO wasn't established at that time, it was its predecessor, the GATT (General
Agreement on Trade and Tariffs. The WTO came about in 1994-1995.)
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.
Trade Related Investment Measures is the name of 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.
Overview of Rules
(1) Trade-Related Investment Measures
In the late 1980s, there was a significant increase in foreign direct investment throughout 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 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 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 Article 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 broad 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. Moreover,
although the APEC Investment Principles adopted in November 1994 provide rules for investment as a whole,
including non-discrimination and national treatment, they have no binding force.
(2) Legal Framework
GATT 1947 prohibited investment measures that violated the principles of national treatment and the general
elimination of quantitative restrictions, but the extent of the prohibitions was never clear. The TRIMs
Agreement, however, contains statements prohibiting any TRIMs that are inconsistent with the provisions of
Articles III or XI of GATT 1994. In addition, it provides an illustrative list that explicitly prohibits local content
requirements, trade balancing requirements, foreign exchange restrictions and export restrictions (domestic sales
requirements) that would violate Article III:4 or XI:1 of GATT 1994. TRIMs prohibited by the Agreement
include those that are mandatory or enforceable under domestic law or administrative rulings, or those with
which compliance is necessary to obtain an advantage (such as subsidies or tax breaks). Figure 8-1 contains a list
of measures specifically prohibited by the TRIMs Agreement. Note that this figure is not exhaustive, but simply
illustrates TRIMs that are prohibited by the TRIMs Agreement. The figure, therefore, calls particular attention to
several common types of TRIMs. We would add that this figure identifies measures that were also inconsistent
with Article III:4 and XI:1 of GATT 1947. Indeed, the TRIMs Agreement is not intended to impose new
obligations, but to clarify the pre-existing GATT 1947 obligations. Under the WTO TRIMs Agreement,
countries are required to rectify any measures inconsistent with the Agreement, within a set period of time, with
a few exceptions (noted in Figure 8-2).
Examples of TRIMs Explicitly
Prohibited by the TRIMs
Local content requirement
Measures requiring the purchase
1. Measures requiring
or use by an enterprise of
that an enterprise's
the importation by an the exportation or sale
domestic products, whether
purchases or use of
for export by an
specified in terms of particular
imported products be
products (parts and
enterprise of products,
products, in terms of volume or
limited to an amount
other goods) used in
whether specified in
value of products, or in terms of
related to the volume or
or related to its local
terms of particular
a proportion of volume or value
value of local products
products, in terms of
of its local production.
that it exports.
restricting its access
volume or value of
(Violation of GATT Article
(Violation of GATT
to foreign exchange
products, or in terms
to an amount related
of a proportion of
Measures restricting the to the foreign
volume or value of its
importation by an
enterprise of products
attributable to the
(Violation of GATT
used in or related to its
enterprise. (Violation Article XI:1)
of GATT Article
generally or to an
amount related to the
volume or value of
local production that it
exports. (Violation of
GATT Article XI:1)
Exceptional Provisions of the TRIMs Agreement
Exceptions for developing
Measures specifically prohibited by the TRIMs
Agreement need not be eliminated immediately,
although such measures must be notified to the
WTO within 90 days after the entry into force of
the TRIMs Agreement. Developed countries will
have a period of two years in which to abolish
such measures; in principle, developing
countries will have five years and leastdeveloped countries will have seven years.
Developing countries are
permitted to retain TRIMs
that constitute a violation of
GATT Article III or XI,
provided the measures meet
the conditions of GATT
Article XVIII which allows
specified derogation from
the GATT provisions, by
virtue of the economic
development needs of
To avoid damaging the
companies already subject
to TRIMs, governments
are allowed to apply the
same TRIMs to new
foreign direct investment
during the transitional
period described in (1)