UPSC Prelims 2020 · GS Paper I
Question 56: Economy and Social Development
With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct ?
- 1.Quantitative restrictions on imports by foreign investors are prohibited.
- 2.They apply to investment measures related to trade in both goods and services.
- 3.They are not concerned with the regulation of foreign investment.
Select the correct answer using the code given below :
AnswerUPSC’s answer is (c).
The WTO's TRIMs Agreement covers investment measures that affect trade in goods only; services come under GATS. It prohibits measures such as local-content and trade-balancing rules, which restrict imports by foreign investors. It does not regulate foreign investment itself, such as entry or ownership. So statements 1 and 3 are right and statement 2 is wrong.
- 1. Import restrictions on foreign investors, such as local-content rules, are prohibited.
- 2. They apply to trade in goods only, not services.
- 3. They do not regulate foreign investment itself.
How you could have got this
- If you were sure statement 2 is not correct, (a), (b) and (d) go: each of them includes 2.
What you needed to know: They apply to trade in goods only, not services.
Only (c) is left. You didn’t need statements 1 or 3.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Wrong: statement 2 is false because TRIMs cover goods only.
- (b) Wrong: statement 2 is false.
- (c) Right: statements 1 and 3.
- (d) Wrong: includes statement 2, which is false.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2020, General Studies Paper I, Series A. The paper on upsc.gov.in.