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Wto Agreement On Investment Measures

As an agreement based on THE existing GATT disciplines on trade in goods, the agreement does not deal with the regulation of foreign investment. The disciplines of the TRIPS agreement focus on investment measures that are contrary to Articles III and XI of the GATT, i.e. that distinguish imported and exported goods and/or create import or export restrictions. For example, a local content requirement, which is not discriminatory for domestic and foreign companies, is contrary to the TRIM agreement, as it involves 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 measure is not negligible in the context of the ON TRIPS agreement. Under the World Trade Organization (WTO) Trade-Related Investment Measures Agreement, commonly known as the TRIM Agreement, WTO members agreed not to implement certain trade-related investment measures in goods that limit or distort trade. Finally, paragraph 2, point (c), includes measures that include restrictions on export or export sales by a company, whether they are certain products, volumes or values of the products or a share of the volume or value of its local production. Since paragraph 2 applies the provisions of Article XI:1 of the 1994 GATT, it deals only with measures limiting exports. Other export measures, such as export incentives and export performance requirements, are therefore not covered by the TRIPS AGREEMENT. Perhaps the most significant development in terms of investment prior to the Uruguay Round was a panel decision in a dispute settlement process between the United States and Canada.

In the Canada Administration of the Investment Review Act (FIRA) (BISD 30S/140, 1984), a GATT dispute resolution body reviewed a complaint filed by the United States regarding certain types of businesses or holdings actually required by Canadian authorities by foreign investors as conditions for authorizing investment projects. These commitments related to the purchase of certain products from domestic sources (local content requirements) and the export of a certain amount or percentage of production (export performance requirements). The proceeding concluded that the local content requirements are inconsistent with the GATT Article III landing requirement, paragraph 4, but that the export performance requirements are not inconsistent with GATT`s obligations. The group noted that the dispute over the consistency with gaTT of trade-specific measures adopted by Canada as part of its foreign investment legislation, not Canada`s right to regulate foreign investment as such, was highlighted.