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Trims Agreement Refers To Treating Foreign Investment At

measures to restrict imports of products (parts and other products) used or related to its local production, by limiting access to foreign exchange by a company, by limiting its access to foreign exchange to an amount related to foreign exchange inflows attributable to the company. (Violation of GATT Article XI:1) The Ministerial Declaration of Punta del Este, which launched the Uruguay Round, addressed the issue of trade-related investment measures as a theme of the new round through a carefully crafted compromise: after examining the functioning of the GATT articles with regard to the restrictive and trade-distorting effects of investment measures, negotiations should , if necessary, develop other provisions that may be necessary to avoid such negative effects on trade. The emphasis on the commercial effects of this mandate highlighted the fact that the negotiations were not intended to deal with the regulation of 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 have proposed provisions prohibiting a wide range of measures in addition to local content requirements, which were found to be inconsistent with Article III in the case of the FIRA Panel, many developing countries have opposed them. The compromise that ultimately resulted from the negotiations is essentially limited to an interpretation and clarification of the application of the GATT provisions on the questioning of imported goods (Article III) and quantitative import or export restrictions on trade-related investment measures (Article XI). The TRIPS agreement therefore does not cover many of the measures discussed in the Uruguay Round negotiations, such as export results and technology transfer. For example, local content requirements (which require the purchase or use of local products), manufacturing requirements (which require internal manufacture of certain components), trade clearing requirements, domestic sales requirements, technology transfer requirements, export performance requirements (which require the export of a certain percentage of production volume) , local capital constraints, currency restrictions, remittance restrictions, licensing requirements and employment restrictions. These measures can also be used as part of tax incentives, contrary to requirements. Some of these investment measures distort trade in violation of GaTT Articles III and XI and are therefore prohibited. [1] whereas, in the Punta del Este Declaration, the Ministers agree that „after examining the functioning of the GATT articles with regard to trade-restrictive effects and distortions of investment measures, negotiations should, if necessary, develop other provisions that may be necessary to avoid such negative effects on trade“; Prior to the Uruguay Round negotiations, the link between trade and investment under the GATT was little taken into account. In the late 1980s, foreign direct investment increased significantly around the world. However, some of the countries that have benefited from foreign investment have imposed numerous restrictions on these investments in order to protect and encourage domestic industry and to prevent the flow of foreign exchange reserves.

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