Explanation-
The Agreement on Trade-Related Investment Measures (“TRIMs Agreement”), one of the Multilateral Agreements on Trade in Goods, prohibits trade-related investment measures, such as local content requirements, that are inconsistent with basic provisions of GATT 1994.
TRIMS Agreement recognizing that certain investment measures can have trade-restrictive and distorting effects, it states that no Member shall apply a measure that is prohibited by the provisions of GATT Article III (national treatment) or Article XI (quantitative restrictions).Hence Statement 1 is correct.
The list includes measures which require particular levels of local procurement by an enterprise (“local content requirements”) or which restrict the volume or value of imports such an enterprise can purchase or use to an amount related to the level of products it exports (“trade balancing requirements”).
This Agreement, negotiated during the Uruguay Round, applies only to measures that affect trade in goods. Hence Statement 2 is incorrect.
The Agreement on Trade-Related Investment Measures (the TRIMs Agreement) stipulates that certain measures adopted by Governments to regulate FDI can cause trade-restrictive and distorting effects. The agreement is only concerned with the trade effects of investment measures. It is not intended to deal with the regulation of investment as such and does not impact directly on WTO members’ ability to regulate and place conditions upon the entry and establishment of foreign investment. Hence Statement 3 is correct.